U.S. stock futures are on the rise on Wednesday as bond yields decrease. Traders are anticipating the release of the Federal Reserve’s minutes from its July rate-setting meeting later in the day.
Stock-Index Futures Trading
Here’s how stock-index futures are currently trading:
- S&P 500 futures (ES00) rose by 11 points or 0.3%, reaching 4465.
- Dow Jones Industrial Average futures (YM00) gained 81 points or 0.2%, reaching 35088.
- Nasdaq 100 futures (NQ00) added 49 points or 0.3%, reaching 15155.
Previous Day’s Performance
On Tuesday, the Dow Jones Industrial Average (DJIA) experienced a decline of 361 points or 1.02%, closing at 34946. The S&P 500 (SPX) declined by 52 points or 1.16%, closing at 4438. The Nasdaq Composite (COMP) also dropped by 157 points or 1.14%, closing at 13631.
Bond Yields Impact
Equity-index futures have seen an early rise on Wednesday as bond yields retreat from their recent highs. The S&P 500 has observed declines in eight out of the last eleven sessions, primarily due to 10-year Treasury yields (BX:TMUBMUSD10Y) approaching levels close to their highest since 2008, around 4.25%. This increase in yields has raised concerns about an augmented supply of government paper and has coincided with positive surprises in economic data.
Implications of Higher Yields
Higher yields not only impact borrowing costs for companies and households but also provide a more appealing alternative to stocks.
Rising Treasury Yields and Concerns about China Weigh on Markets
rising Treasury yields have dampened the outlook for the equity market. At the same time, concerns about China’s faltering economy continued to weigh commodity and currency markets after the latest batch of weaker-than-expected data.
According to Stephen Innes, managing partner at SPI Asset Management, “If U.S. yields continue to drift higher from here, we will likely feel more air pockets that could have increasingly significant implications for broader risk markets.”
The next big catalyst for equity and bond markets is likely to be minutes of the Federal Open Market Committee meeting held last month, due for release at 2 p.m. Eastern, which may provide more insight into the central bank’s thinking.
U.S. economic updates set for release on Wednesday include housing starts and building permits in July, due for release at 8:30 a.m.. Industrial production and capacity utilization for July arrives at 9:15 a.m.
Retailer Target will deliver its results on Wednesday. Shares in Tesla are bucking the market trend, falling 1% as concerns about price cuts in China continue to weigh.