US stock futures fell sharply on Monday after the benchmark 10-year Treasury yield rose above 5%, as investors increasingly accept interest rates will stay higher for longer.
Dow Jones Industrial Average (^DJI) futures slid around 0.6%, or 200 points, while S&P 500 (^GSPC) futures dropped almost 0.7%. Futures on the tech-heavy Nasdaq 100 (^NDX) were down 0.8%, setting all three major indexes on track to extend Friday’s losses.
The ongoing sell-off in bonds and worries about an escalation in Middle East hostilities are weighing on the market, as it waits for Big Tech companies to fire up earnings season this week. Stocks have stuttered as the “new normal” of elevated borrowing costs has sunk in, after Powell signaled the Fed’s commitment to the strategy.
That helped lift yields on US government bonds, seen as a “safe haven” in times of economic uncertainty. The 10-year yield (^TNX) was last up over 8 basis points at 5.012% on Monday, its highest level since 2007. Yields on 2-year and 30-year (^TYX) Treasuries also rose.
Against that backdrop, investors are bracing for key data to shed light on the strength of the US economy. Readings on third-quarter GDP and the Fed’s preferred inflation gauge are expected later this week.
Eyes are also on the megacaps reporting results this week, given the Nasdaq leads the losses among stock indexes. Microsoft (MSFT) and Alphabet (GOOGL) are on the docket on Tuesday, with Meta (META) and Amazon (AMZN) slated for Wednesday and Thursday, respectively.
Shares of Chevron (CVX) fell 3% in pre-market after the oil major said it will buy its smaller rival Hess (HES) for $53 billion in stock, seen as a bid to increase its operations in Guyana. Elsewhere in deal news, Roche has agreed to pay $7.1 billion to acquire Telavant. The bowel drugmaker is owned by Pfizer (PFE) and Roivant Sciences (ROIV), whose shares rose almost 12%.
KStock futures slide after 10-year Treasury passes key 5% milestone
Stocks on Wall Street were poised on Monday to build on last week’s losses as the continuing surge in Treasury yields dampened the mood in a market getting ready for Big Tech earnings.
Futures on the Dow Jones Industrial Average (^DJI) were down 0.57%, or 187 points, while S&P 500 (^GSPC) futures dropped 0.56%. Contracts on the tech-heavy Nasdaq 100 (^NDX) were 0.66% lower.
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