Nasdaq Index, Dow Jones, S&P 500 News: Stock Futures Drop as Treasury Yields Rise

Stock Futures Dip Amid Rising Treasury Yields

Stock futures were lower on Wednesday as traders monitored Treasury yields with lingering inflation concerns. This follows a drop in the Dow of over 200 points on Tuesday due to rising yields. The S&P 500 closed flat, while the Nasdaq Composite hit a record high, driven by Nvidia’s strong performance.

At 11:07 GMT, Dow futures are trading 38729.00, down 215.00 or -0.55%. S&P 500 Index futures are at 5293.00, down 31.75 or -0.60% and Nasdaq futures are trading 18815.50, down 125.00 or -0.66%.

Impressive Monthly Gains

Despite these fluctuations, major indices are set to close May with substantial gains, buoyed by better-than-expected earnings. The S&P 500 has risen 5.4% this month, the Dow is up 2.7%, and the Nasdaq has surged 8.7%. This optimism persists even as traders adjust their expectations for Federal Reserve rate cuts. According to CME’s FedWatch Tool, there is a 54% chance that rates will remain unchanged in September. The improving economic outlook and controlled inflation are seen as positive for corporate profits, providing a bullish outlook for stocks.

Impact of Treasury Yields

Wednesday’s downturn in futures is linked to the 10-year Treasury note yield, which increased to over 4.56%, marking its second day of gains. On Tuesday, the yield rose above 4.5% following a lackluster Treasury auction. This increase in yields poses challenges for stock investors.

Market Movers

Nvidia’s shares fell slightly in premarket trading, poised for their first decline since its impressive earnings report last week. In contrast, American Airlines saw an 8% premarket drop after cutting its second-quarter sales outlook, with Southwest Airlines also dipping by 2%. On a positive note, Robinhood gained 3% after announcing a $1 billion share repurchase program.

Corporate Developments

ConocoPhillips is reportedly in talks to acquire Marathon Oil in a deal valued at over $15 billion. Marathon Oil shares jumped 5.8%, while ConocoPhillips fell 0.7%. Dick’s Sporting Goods raised its full-year earnings guidance following a strong fiscal first quarter, with earnings per share and revenue surpassing expectations.

Market Forecast

Looking ahead, the market faces mixed signals. While Nvidia continues to lead the tech sector, overall market sentiment is cautious due to rising Treasury yields and inflation concerns. Stocks are experiencing pressure across major markets, reflecting a cautious stance as investors balance inflation worries against strong corporate earnings. Expect continued volatility with a slight bearish tilt as markets adjust to these factors.

Technical Analysis

E-mini S&P 500 Index futures are edging lower on Wednesday, putting the benchmark in a position to test last week’s low at 5273.50. A trade through this level could encourage a round of profit-taking. This may put enough downside pressure on the market to challenge the 50-day moving average at 5216.47.

The 50-day moving average is controlling the intermediate uptrend. Its failure could trigger the start of a steep decline.

On the upside, the buying has to be strong enough to take out 5368.25 in order to set a new record and signal a resumption of the uptrend.