U.S. stock futures edge higher as 10-year yield closes in on 2%
U.S. stock index futures edged higher on Tuesday, as the benchmark 10-year Treasury note approached a level not seen since January 2020.
Futures on the Dow Jones Industrial Average
rose 68 points, or 0.2%, to 35037
Futures on the S&P 500
rose 7 points, or 0.2%, to 4482
Futures on the Nasdaq 100
gained 24 points, or 0.2%, to 14583
On Monday, the Dow Jones Industrial Average
rose 1 points, or 0%, to 35091, the S&P 500
declined 17 points, or 0.37%, to 4484, and the Nasdaq Composite
dropped 82 points, or 0.58%, to 14016.
What’s driving markets
Rising bond yields have been the story of 2022 so far, and now the talk is how quickly the U.S. Treasury10-year yield
may reach 2%, trading at 1.93% in the early hours of Tuesday.
Peter Garnry, head of equity strategy at Saxo Bank, says the pressure will continue for U.S. technology stocks. “The VIX
remains above 22 and financial conditions are continuing to tighten with credit spreads moving higher so this should be key to monitor for equity investors,” he said.
The hurdles for tech companies to grow by mergers was shown as Nvidia
dropped its planned $40 billion acquisition of microchip designer ARM Holdings from Japanese investor SoftBank after regulatory opposition.
Strategists at UBS say they are sticking to their earnings forecasts for the year, and their S&P 500 price target of 5,100 by the end of the year.
“While there remains a risk that the Federal Reserve could tighten by more than markets expect—currently six hikes of 25 basis points each—this is not our base case. With demand remaining healthy, we advise investors to focus on winners from global growth. Against a backdrop of rising rates, we expect value sectors to outperform growth sectors,” said Mark Haefele, chief investment officer for global wealth management at UBS.
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