News

U.S. Stock Futures Mixed as Bond Yields Remain Low

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4.8

Andrew R. Michaud

• November 09, 2023

U.S. stock futures are showing a mixed trend as benchmark bond yields stay near their six-week lows. Traders are eagerly awaiting comments from Fed Chair Jerome Powell for further insight.

Stock-Index Futures Trading

Here's how the stock-index futures are trading:

• S&P 500 futures (ES00) rose 1 point, or 0%, to 4401
• Dow Jones Industrial Average futures (YM00) added 28 points, or 0.1%, to 34201
• Nasdaq 100 futures (NQ00) eased 13 points, or 0.1%, to 15373

Previous Session Recap

In the previous session, the Dow Jones Industrial Average (DJIA) fell 40 points, or 0.12%, to 34112. Meanwhile, the S&P 500 (SPX) increased 4 points, or 0.1%, to 4383, and the Nasdaq Composite (COMP) gained 11 points, or 0.08%, to 13650.

Longest Rally in Two Years Challenges Stock Market

Stocks are currently struggling to extend their longest rally in two years as implied borrowing costs remain low. Despite this challenge, the S&P 500 has shown a significant increase of 6.45% during an eight-day winning streak.

This surge was fueled by hopes that the Federal Reserve has finished raising interest rates this cycle due to signs of a cooling job market. The dip in the 10-year Treasury yield (BX:TMUBMUSD10Y) from a 16-year peak to below 4.5% further supported this sentiment.

Moreover, concerns regarding oversupply and its impact on bond prices were alleviated temporarily after a mixed but well-received sale of $40 billion of 10-year paper on Wednesday.

Stephen Innes, managing partner at SPI Asset Management, noted, "The bond market seemed to absorb the auction without sparking renewed concerns about oversupply, supporting the prevailing trend of lower yields, particularly in longer-duration assets."

Exciting Opportunity for Treasury

The Treasury is set to sell $24 billion of 30-year bonds at 1 p.m. Eastern on Thursday, presenting an exciting opportunity for investors.

Traders Anticipate Powell's Comments on Financial Conditions

Traders are eagerly awaiting Federal Reserve Chairman Jerome Powell's comments on the recent easing of financial conditions and its potential impact on the central bank's thinking on interest rates. Powell is scheduled to speak at an International Monetary Fund panel on global monetary policy challenges at 2 p.m.

Insight from Federal Reserve Bank of Richmond President

In addition to Powell's remarks, Federal Reserve Bank of Richmond President Thomas Barkin will also provide insight into the economic and policy outlook in a webcast hosted by MNI starting at 11 a.m.

Focus on Initial Jobless Claims Data

Investors will closely monitor the release of the weekly initial jobless claims data at 8:30 a.m. for confirmation on the state of the labor market as it continues to cool.

Notable Company Results Today

Before Wall Street's opening bell, luxury brand owner Tapestry (TPR) and biotech group Novavax (NVAX) will announce their latest results. Later in the day, energy technology company Plug Power (PLUG) and casino operator Wynn Resorts (WYNN) will present their numbers after the market closes.

Analysts Express Concerns Over Market Sentiment

Some analysts are expressing concerns about the current level of complacency in the market following the sharp rebound in stocks. The CBOE VIX index, which measures expected S&P 500 volatility based on options, has fallen to an eight-week low after eight consecutive sessions of declines, marking its longest losing streak since 2015 according to Deutsche Bank.

Mark Newton, Head of Technical Strategy at Fundstrat, believes there may be a short-term peak for stocks between Thursday's open and Friday's close, allowing for a period of consolidation. However, Newton also noted that the recent strength of the market makes it unlikely for the lows seen in late October to be breached in the coming weeks.