SPY
Stock futures retreat as Treasury yields march higher
- While the S&P 500 is coming off its first losing week in three, the
market is going into the final week of February with solid gains. The Dow
and S&P 500 have already climbed more than 5% this month, the Nasdaq
advanced
6.2% and the small-cap Russell 2000 outperformed with a gain of 9.3%.
Some fears of rapidly rising bond yields are still settling in as U.S.
stock index futures point to another weak session at today's open: Dow
-0.7%; S&P 500 -1.1%; Nasdaq -1.5%.
- *Bigger picture:* The 10-year Treasury yield jumped 14 basis points
last week to 1.34%, near its highest level since February 2020. It even
touched 1.37% overnight, meaning the benchmark rate has moved up 28 basis
points so far this month. That could hurt high-growth companies dependent
on easy borrowing while lessening the relative appeal of stocks. However,
many on Wall Street still believe the jump in bond yields reflects a sign
of growing confidence in the economic recovery and equities should be
able
to absorb higher rates due to strong earnings.
- *Quote:* "We do not see the recent increase in yields as a threat to
the bull market," said Keith Lerner, chief market strategist at Truist.
"Given that we are in the early stages of an economic recovery, monetary
and fiscal policy remains supportive, the sharp rebound in earnings, and
favorable relative valuations, we maintain our overweight to equities."
- Investors this week will also monitor the latest developments out of
Washington, with House Democrats hoping to finalize a $1.9T stimulus
package. A pickup in inflation could eventually prompt the Fed to raise
short-term interest rates, though most traders don't see that happening
in
the near-term. Also keep an eye on Jerome Powell, who is expected to
reiterate a commitment to super easy monetary policy in his semi-annual
testimony before Congress this week.
- ARK Invest's Cathie Wood expects a stock market correction: "There
will be a valuation reset. There will be fear."
|Today, 4:29 AM|10 Comments
Stock futures retreat as Treasury yields march higher
- While the S&P 500 is coming off its first losing week in three, the
market is going into the final week of February with solid gains. The Dow
and S&P 500 have already climbed more than 5% this month, the Nasdaq
advanced
6.2% and the small-cap Russell 2000 outperformed with a gain of 9.3%.
Some fears of rapidly rising bond yields are still settling in as U.S.
stock index futures point to another weak session at today's open: Dow
-0.7%; S&P 500 -1.1%; Nasdaq -1.5%.
- *Bigger picture:* The 10-year Treasury yield jumped 14 basis points
last week to 1.34%, near its highest level since February 2020. It even
touched 1.37% overnight, meaning the benchmark rate has moved up 28 basis
points so far this month. That could hurt high-growth companies dependent
on easy borrowing while lessening the relative appeal of stocks. However,
many on Wall Street still believe the jump in bond yields reflects a sign
of growing confidence in the economic recovery and equities should be
able
to absorb higher rates due to strong earnings.
- *Quote:* "We do not see the recent increase in yields as a threat to
the bull market," said Keith Lerner, chief market strategist at Truist.
"Given that we are in the early stages of an economic recovery, monetary
and fiscal policy remains supportive, the sharp rebound in earnings, and
favorable relative valuations, we maintain our overweight to equities."
- Investors this week will also monitor the latest developments out of
Washington, with House Democrats hoping to finalize a $1.9T stimulus
package. A pickup in inflation could eventually prompt the Fed to raise
short-term interest rates, though most traders don't see that happening
in
the near-term. Also keep an eye on Jerome Powell, who is expected to
reiterate a commitment to super easy monetary policy in his semi-annual
testimony before Congress this week.
- ARK Invest's Cathie Wood expects a stock market correction: "There
will be a valuation reset. There will be fear."
|Today, 4:29 AM|10 Comments
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