Sunday, May 29, 2022

Investors in the United States see stable stock futures while bond yields rise

Stock futures are flat as investors gauge a spike in bond yields

Image courtesy of CNBC

The futures on stocks in the United States were flat as investors keep track of the rising yields on bonds.

CNBC has recently reported that futures on stocks in the United States stabilized in trading overnight on Monday as yields on bonds rose, which pressured pockets of growth in companies such as Microsoft and Amazon.

Futures from the Dow Jones Industrial Average and Nasdaq 100 touched 20 points and 0.2 per cent respectively, while those from S&P 500 stabilized.

The Treasury of the United States in 10 years yielded over economic optimism and fears of inflation, reaching its highest level since June at 1.5 per cent on Monday for a while.

Equities traded unevenly as rates soared.

The Dow Jones Industrial Average on Monday and the Russell 2000 of the small cap reached 71 points and 1.5 per cent, respectively, but the S&P 500 dropped by 0.3 per cent. The Nasdaq Composite touched 0.5 per cent.

Jim Paulsen, chief investment strategist for Leuthold Group, said, “The stock market increasingly indicates that the U.S. economy has entered another reopening cycle… A Covid-led resurgence in economic activity may well worsen supply-chain woes and eventually reignite inflation concerns. But, for now, it has forced investors to reevaluate whether they have too much in growth and tech and not enough in economically sensitive investments”.

Traders were also keeping track of Jerome Powell, chairman of the Federal Reserve, who will announce that inflation could last beyond expectations, adding, “Inflation is elevated and will likely remain so in coming months before moderating… As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2-percent goal”.

It has been considering since last week “tapering” or slowly retiring its stimulus over the outbreak. It preserved the rates but possibly increased the rates of interest in 2022, preceding three apiece for 2023 and 2024.

The market has been dreading on Monday over the possibility of a shutdown of the government of the United States on Friday, which might force federal legislators to agree on a funding plan.

They may not settle over raising the ceiling on debts for several more weeks while a temporary solution that extends funding could develop. Senators from the Grand Old Party or GOP on Monday blocked a bill that would fund the government and stop the ceiling on debts in the United States.

Wall Street has been looking forward to the upcoming vote in the House of Representatives on the bipartisan bill on infrastructure worth USD 1 trillion that the Senate already approved.

Trading in September and the third quarter will end on Thursday. The Dow and the S&P 500 touches 1.4 and 1.8 per cent for the month, respectively, while the Nasdaq Composite has fell by 1.9 per cent in September.

Investors have been worrying about the Delta strain of coronavirus, the tapering plan by the Federal Reserve, and inflation, but the Dow still reaches almost 14 per cent hitherto despite the weakness in September. The S&P 500 and Nasdaq also soar sharply.

Lindsey Bell of Ally Invest said on “Closing Bell” on CNBC on Monday, “I think the wall of worry continued to grow… While there are very valid concerns by market participants I do think the one thing … is the strength of the consumer. While inflation could be coming, the consumer has been resilient”.

Mark Colin Escanilla Abliterhttps://www.colinabliter.blogspot.com/
Mark is a writing contributor for Pigeon Week, specializing in relevant stories on issues such as business.

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