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U.S. stock index futures edged higher on Tuesday, as the benchmark 10-year Treasury note approached a level not seen since January 2020.
What’s happening
-
Futures on the Dow Jones Industrial Average
YM00,
+0.01%
rose 68 points, or 0.2%, to 35037 -
Futures on the S&P 500
ES00,
-0.15%
rose 7 points, or 0.2%, to 4482 -
Futures on the Nasdaq 100
NQ00,
-0.25%
gained 24 points, or 0.2%, to 14583
On Monday, the Dow Jones Industrial Average
DJIA,
rose 1 points, or 0%, to 35091, the S&P 500
SPX,
declined 17 points, or 0.37%, to 4484, and the Nasdaq Composite
COMP,
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
TMUBMUSD10Y,
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
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
NVDA,
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.
