S&P 500 futures slip as a week of soaring bond yields, geopolitics … – Morningstar

By Barbara Kollmeyer

U.S. stock futures pointed to a struggle for Wall Street on Friday, as rising bond yields and geopolitical tensions continue to take a toll on investors, who were digesting comments from Federal Reserve Chairman Jerome Powell.

What’s happening

S&P 500 futures ES00 fell 10.25 points, or 0.2%, to 4,293Dow Jones Industrial Average futures YM00 dropped 67 points, or 0.2% to 33,481Nasdaq-100 futures NQ00 fell 45 points, or 0.3%, to 14,846

On Thursday, the Dow Jones Industrial Average DJIA finished 250.91 points, or 0.7% lower, at 33,414.17. The S&P 500 SPX fell 36.60 points, or 0.8%, to end at 4,278, and the Nasdaq Composite COMP lost 128.12 points, or 1%, at 13,186.17.

What’s driving markets

Major indexes were poised for weekly losses as the 10-year Treasury yield came within less than a basis point of the psychological key 5% level on Thursday.

The yield on the 10-year note BX:TMUBMUSD10Y was down 4 basis points at 4.944% on Friday, but has surged 31 basis points this week, from 4.616% on Monday.

Read: Why stock-market investors are fixated on 5% as 10-year Treasury yield nears key threshold

Speaking in New York on Thursday, Powell gave a cautious outlook, but didn’t close the door on further interest rate increases. He also said that higher Treasury yields could be helping the Fed fight inflation, given they were helping to tighten financial conditions.

“The [bond] selloff could be explained by strong retail sales data — that followed a strong [nonfarm payroll] read and a stronger-than-expected inflation data since the month started — which both fueled the hawkish Fed expectations,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note to clients.

Cleveland Fed President Loretta Mester at 12:15 p.m. is the last scheduled speaker before the blackout period in advance of the Nov. 1 rate decision.

On the corporate earnings front, American Express (AXP) will report ahead of the open, with next week bringing big tech names such as Alphabet (GOOGL), Microsoft (MSFT) and Amazon.com (AMZN).

The near two-week war between Israel and Hamas has also weighed on investors, with oil prices up again Friday, with investors wary of further escalation via a possible ground invasion by the Israeli military. Palestinians in Gaza reported heavy strikes in the southern region, where they had been told to evacuate, with a large Israeli town in the north near the Lebanese border also evacuating.

West Texas Intermediate crude (CL.1) rose 1% to $89.39 a barrel, with gold (GC00) climbing $12.80 to $1,993.30 an ounce.

-Barbara Kollmeyer

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10-20-23 0602ET

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