US megacap stocks lose ground as yields rise
Thursday, 6 October 2022
US stock index futures fell on Wednesday ahead of key economic data as rising Treasury yields spurred selling in megacap growth stocks, with recession fears from aggressive central bank rate hikes weighing on risk appetite, reports Reuters.
After posting a loss in the previous quarter, the benchmark S&P 500 index has gained 5.7 per cent so far this week as yields fell for two straight sessions on softer US economic data, UK's tax turnaround and Australia's smaller-than-expected rate hike.
But as traders reassessed their positions based on how aggressively they expect the Federal Reserve will raise rates, yields on the 10-year Treasury note rose sharply.
Rate-sensitive technology and related stocks like Nvidia Corp, Amazon.com, Apple Inc and Alphabet Inc fell between 0.7 per cent and 0.9 per cent in premarket trading.
Twitter Inc also lost momentum in line with its peers, a day after surging 22 per cent after billionaire Elon Musk decided to proceed with his original $44-billion bid to take the social media company private.
Banks such as Citigroup and JPMorgan Chase & Co slipped more than 1 per cent each.
Investors awaited the ADP's private payrolls report, the S&P services PMI data and ISM's non-manufacturing PMI for clues on the strength of the U.S. economy and labor market.
Investors are also keeping a close watch on comments on inflation from the Fed's Atlanta President Raphel Bostic, especially as several policymakers are already sticking to an aggressive monetary policy to battle price pressures.
At 06:43 a.m. ET, Dow e-minis were down 223 points, or 0.73 per cent, S&P 500 e-minis were down 27.25 points, or 0.72 per cent, and Nasdaq 100 e-minis were down 82 points, or 0.7 per cent.
Emerson Electric Co gained 2.2 per cent after a media report that the manufacturing giant is in talks with U.S. buyout firm Blackstone Inc to sell part of its commercial and residential solution business assets.
Shares of U.S.-listed Chinese companies including Alibaba Group and JD.com were up between 1.5 per cent to 3.2 per cent, tracking a jump in their Hong Kong counterparts.