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U.S. stock-index futures indicated a mixed start for the week Monday, following losses for all three major benchmarks last week as investors weighed brightening economic prospects against worries that interest rates will climb sooner than anticipated.
Investors will be attentive to comments from a parade of speakers from the Federal Reserve, including those from Chairman Jerome Powell later in the morning.
How are stock benchmarks performing?
-
Futures for the Dow Jones Industrial Average
YM00,
-0.03% YMM21,
-0.03%
were off 48 points at 32,455, a decline of 0.2%. -
S&P 500 futures
ES00,
+0.24% ESM21,
+0.24%
added 3.70 points, or less than 0.1%, to reach 3,903.75. -
Nasdaq-100 futures
NQ00,
+0.86% NQM21,
+0.86%
advanced 103.75 points to reach 12,948.25, a gain of 0.8%.
On Friday, the Dow
DJIA,
put in a weekly decline of 0.5%, the S&P 500
SPX,
and the Nasdaq Composite Index
COMP,
both slid 0.8%.
What’s driving the market?
Equity markets have been fixated on rates, with a modest pullback of the 10-year Treasury yield
TMUBMUSD10Y,
to start March’s last full week of trading in helping to boost technology-related stocks, which were big winners amid the COVID-19 pandemic but have been under pressure more recently as yields have risen.
The 10-year Treasury yield stood at around 1.68%, down from 1.729% Friday.
Investors have been skittish about the outlook for buying stocks because fiscal stimulus, state reopenings and vaccine rollouts are likely to lead to a major upswing for the economy and higher interest rates, as falling bond prices push yields higher and make speculative and high-growth assets look less compelling.
“Watch out for further gains for US yields, as this could negatively impact the relatively lower-yielding growth stocks and buck-denominated metals in the weeks ahead,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a Monday note.
“However, if yields were to reverse then that should provide a positive backdrop for these markets,” the analyst said.
Last week’s slide lower for major benchmarks came after the Federal Reserve appeared to strike a dovish tone at its policy meeting on Wednesday but bond yields rose on expectations for economic recovery and inflation this year.
Markets have also been fretting about the central bank’s decision to sunset a yearlong reprieve that had eased capital requirements for big banks. That disappointed investors who had hoped for an extension, raising worries that appetite for bond prices may take a leg lower, putting further pressure on yields, if banks aren’t able to exclude assets like Treasurys from their so-called supplementary leverage ratios.
Market participants may get another chance to hear from Fed Chairman Jerome Powell at 9 a.m. Eastern Time when he speaks at an event hosted by the Bank for International Settlements on innovation in the digital age.
On the public health front, AstaZeneca
AZN,
on Monday said that its COVID-19 vaccine was shown to be safe and 79% effective in preventing symptomatic disease in final-stage U.S. clinical trials. The U.S. trial indicated no increased chance of blood-clotting, which had led to the suspension of the vaccine in parts of Europe.
Looking ahead, investors await data on existing home sales at 10 ET.
Which stocks are in focus?
-
Canadian Pacific Railway Ltd.
CP,
-1.37%
is offering to buy Kansas City Southern
KSU,
+0.38%
in a deal valued at $25 billion. -
Tesla Inc.
TSLA,
+0.26%
bull Cathie Wood of Ark Investment released a new four-year target fr the electric-vehicle maker of $3,000 a share.
