Futures fall as 10-year yields hit fresh 16-yr highs; jobs data in focus

1 month ago 24

Traders work on the floor of the NYSE in New York

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File Photo Acquire Licensing Rights

  • Point Biopharma Global jumps on Eli Lilly buyout deal
  • Airbnb down after brokerage downgrade
  • McCormick falls after Q3 sales miss
  • Futures down: Dow 0.26%, S&P 0.29%, Nasdaq 0.38%

Oct 3 (Reuters) - U.S. stock index futures fell on Tuesday as prospects of an extended restrictive monetary policy pushed 10-year Treasury yields to a fresh 16-year high, while investors awaited key employment data to gauge the Federal Reserve's rate path.

Investors will closely monitor the Job Openings and Labor Turnover Survey (JOLTS), due at 10 a.m. ET, while a slew of other data including the ADP National Employment numbers and the more comprehensive non-farms payrolls will also be on their radar later this week.

The S&P 500 (.SPX) ended flat on Monday with utilities, often considered as a bond proxy, falling sharply on uncertainty over the U.S. interest rate path, with the 10-year Treasury yield scaling a 16-year peak following an agreement to avert a government shutdown.

"U.S. equities begin the fourth quarter as the tug-of-war between bull and bear camps remains," U.S. Bank Asset Management analysts wrote in a note.

"Persistent inflation, elevated interest rates and uncertainty over the pace of earnings growth in 2023 and 2024 remain headwinds to advancing equity prices."

Megacap growth stocks were largely mixed in Tuesday's premarket trading, with Apple (AAPL.O), Tesla (TSLA.O), Alphabet (GOOGL.O), Microsoft (MSFT.O) and Amazon.com (AMZN.O) falling between 0.3% and 1.0%.

Megacaps have had a stellar first half this year driven by the Artificial Intelligence (AI) hype, though some believe these stocks could lose momentum as yields continue to rise.

Fed officials reiterated the need to keep interest rates restrictive for "some time" with indications of another likely hike this year.

Investors would also look out for remarks from Atlanta Fed President Raphael Bostic later in the day.

Traders' bets for at least a 25-basis-point rate hike in November stood at close to 26%, while they have priced in a 45% chance for a hike in December, according to the CME Group's FedWatch Tool.

At 7:21 a.m. ET, Dow e-minis were down 86 points, or 0.26%, S&P 500 e-minis were down 12.5 points, or 0.29%, and Nasdaq 100 e-minis were down 56.75 points, or 0.38%.

Supporting sentiment, oil prices extended their decline in early trade after falling to a three-week low on Monday due to strength in the dollar, rising bond yields and mixed supply signals.

Among individual stocks, Airbnb (ABNB.O) fell 2.4% after Keybanc downgraded the vacation lodging platform's stock to "sector weight".

Point Biopharma Global (PNT.O) surged 84.7% as Eli Lilly and Co (LLY.N) is set to buy the cancer therapy developer for $1.4 billion, both companies said.

McCormick (MKC.N) dipped 3.0% after the spice maker missed third quarter sales estimates.

Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru Editing by Vinay Dwivedi

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