Thursday February 25th

25-02-2021

U.S. stock futures are under some pressure following Dow’s record close

U.S. stock index futures were mostly down slightly Thursday after the Dow Jones Industrial Average closed at a record high. Futures contracts tied to the Dow were bouncing between slight gains and losses. S&P 500 futures lost 0.3%. Nasdaq 100 futures shed about 1% as tech stocks came under pressure again. Shares of Tesla and Facebook fell in premarket trading. The move comes after the Dow jumped 425 points on Wednesday to close at a record high in a volatile session that at one point saw the 30-stock average drop more than 110 points. The S&P 500 advanced 1.1%, while the Nasdaq Composite gained 1%. Earlier in the session, the tech-heavy index was down 1.3%. Rising rates weighed on stocks early in the session as the U.S. 10-year Treasury yield topped 1.4% and hit its highest level since February 2020. Higher rates could spur investors to rotate out of stocks and into bonds. Higher rates could also hit the growth-oriented technology sector especially hard. The 10-year yield hit 1.46% on Thursday morning. “Our base case is that rates will continue to rise due to increasing growth and inflation expectations and, eventually, Federal Reserve normalization,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe if rates move too high too fast, the Fed will intervene to make sure rising rates don’t become too restrictive and disrupt equity markets or the real economy,” he said. Yields came off their highs after Federal Reserve Chair Jerome Powell continued to downplay the threat of inflation. “It seems pretty clear to us that the move in rates has been driven by growing optimism about economic growth, and rates are finally ‘catching up’ to the bullish growth outlook in equities,” said David Lefkowitz, head of equities Americas at UBS Global Wealth Management. “So equity investors should not be overly concerned.” On the data front, initial jobless claims numbers will be released at 8:30 a.m. ET on Thursday, with economists surveyed by Dow Jones expecting a print of 845,000. Also at 8:30 a.m. ET the U.S. Department of Commerce will release its second estimate for fourth-quarter GDP. It will also be a busy day on the earnings front with a number of companies set to release quarterly results. Best Buy, Papa John’s and Domino’s Pizza are among the names on deck before the opening bell. After the market closes, Salesforce.com, Beyond Meat, Etsy and Caesars Entertainment are among the names reporting. Newly public companies Airbnb and DoorDash are also slated to report earnings on Thursday after the closing bell. Stocks in Asia-Pacific largely jumped on Thursday after the Dow Jones Industrial Average surged to a record closing high overnight. South Korea’s Kospi led gains regionally as it jumped 3.5% to close at 3,099.69. In Japan, the Nikkei 225 gained 1.67% to close at 30,168.27 as shares of conglomerate SoftBank Group surged 3.84%. The Topix index also gained 1.22% to finish its trading day at 1,926.23. Hong Kong’s Hang Seng index also saw gains as it rose 1.2% to close at 30,074.17. Mainland Chinese stocks were mixed on the day as the Shanghai composite gained 0.59% to 3,585.05 while the Shenzhen component dipped 0.282% to 14,828.80. Oil prices rose for a fourth straight session on Thursday to the highest levels in more than 13 months, underpinned by monetary easing policies and lower crude production in the United States. Brent crude futures for April gained 19 cents, 0.3%, to $67.23 a barrel by 0400 GMT, while U.S. West Texas Intermediate crude for April was at $63.46 a barrel, up 824cents, 0.38%. Both contracts touched their highest since January 2020 earlier in the session with Brent at $67.44 and WTI at $63.67. Gold prices edged lower on Thursday as higher U.S. Treasury yields dented the metal’s appeal, although losses were limited by a weaker dollar and Federal Reserve Chairman Jerome Powell’s dovish comments. Spot gold fell 0.3% to $1,798.71 per ounce by 0059 GMT. U.S. gold futures gained 0.2% to $1,801.20.