Stock Futures Slip Ahead of Jobs Data
U.S. stock futures dropped at the end of a downbeat week for major indexes and ahead of a monthly update on the job market.
Futures on the S&P 500 slipped 0.4% and Dow Jones Industrial Average futures declined 0.4%. The contracts don't necessarily predict market moves after the markets open.
Europe stocks fell Friday for a two-day losing streak. The Stoxx Europe 600 lost 0.8% in morning trade dragged down by declines in communication services and information technology sectors.
The U.K.'s FTSE 100, which is dominated by large international businesses, shed 0.8%. Other stock indexes in Europe also mostly fell as France's CAC 40 was down 0.9%, the U.K.'s FTSE 250 fell 0.6% and Germany's DAX shed 0.8%.
The Swiss franc, the euro and the British pound slipped 0.2%, 0.3% and 0.3% respectively against the U.S. dollar.
In commodities, international benchmark Brent crude strengthened 1.4% to $67.66 a barrel. Gold was down 0.6% to $1,690.60 a troy ounce.
German 10-year bund yields rose to minus 0.303% and the yield on U.K. 10-year gilts gained to 0.753%. The 10-year U.S. Treasury yield ticked up to 1.551% from 1.547%. Bond yields move inversely to prices.
In Asia, indexes mostly fell as Hong Kong's Hang Seng was mostly flat, losing 0.1%, Japan's Nikkei 225 index was lower 0.2%, and China's benchmark Shanghai Composite was broadly flat between minus 1% and 0.6%.
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2021-03-05 09:54:00 GMT DJ S&P 500 on Track for Third Week of Declines, Led by Tech
By Joe Wallace
U.S. stock futures fell Friday, pointing to another day of losses for major indexes as investors awaited the monthly jobs report for fresh insights into the health of the labor market.
Futures linked to the S&P 500 edged down 0.4%. The S&P 500 is on track for its third week of declines. It was down 1.1% for the week by the end of Thursday, and closed at its lowest level since the end of January.
Contracts tied to the technology-heavy Nasdaq-100 fell 0.6%, suggesting that the sector will continue to lead the retreat after the opening bell.
Stocks have stumbled in recent weeks as a climb in bond yields has called into question whether low interest rates, which propelled valuations higher for much of the past year, can continue for much longer. Yields, which rise as bond prices fall, have rallied in response to expectations of a quickening pace of growth and inflation as the economy reopens from the coronavirus pandemic.
The yield on 10-year Treasury notes ticked up again Friday, to 1.557%, from 1.547% Thursday. That marked the highest level for the benchmark borrowing cost since February last year. The latest climb in yields came after Federal Reserve Chairman Jerome Powell provided no sign the central bank would seek to stem the rise when he spoke at The Wall Street Journal Jobs Summit.
"It is all about the bond-yield moves. It is all about Jerome Powell," said Edward Park, chief investment officer at Brooks Macdonald. "There is a huge amount of uncertainty in the market at the moment as to whether the inflation that is widely expected in the short term. is transient or whether it is more sustained."
Bond yields are likely to keep rising and stocks may remain jittery unless the Fed takes concrete steps to put a cap on yields, according to Mr. Park. "Markets are at their most volatile when they are not sure how monetary policy and fiscal policy is going to react."
Technology stocks have borne the brunt of the shift in sentiment in recent weeks. The Nasdaq Composite Index, a closely watched barometer for the sector, on Thursday fell to its lowest level since Jan. 4. The index ended the day down 9.7% from its Feb. 12 high, putting it just short of correction territory.
Investors will later parse the February jobs report, due to be released at 8:30 a.m. ET. It is expected to show that the economy created 210,000 jobs last month. That would add to signs of a slow improvement in the labor market, after data on Thursday showed filings for unemployment benefits reached their lowest level in three months.
The jobs report may not sway bond yields much because the data are unlikely to affect the progress of the Biden administration's stimulus package through the Senate, said Lyn Graham-Taylor, senior rates strategist at Rabobank. The Senate on Thursday advanced the $1.9 trillion bill after making a series of adjustments, and is expected to give its approval within days.
Yields are likely to keep heading higher, according to Mr. Graham-Taylor. "So far the Fed's emphasized that it's not loving it, but it is pretty comfortable with it," he said. "In the back of their minds, it is natural for yields to rise a bit: We're not in the eye of the storm as we were."
Oil prices rallied for a second day after OPEC and a Russia-led coalition of oil producers kept most of their production cuts in place, taking the market by surprise. Brent crude, the benchmark in international energy markets, rose 1.9% to $68.02 a barrel.
Overseas, the pan-continental Stoxx Europe 600 ticked down 0.5%.
Major Asian indexes ended the day down. Japan's Nikkei 225 ticked 0.2% lower, while Hong Kong's Hang Seng Index dropped almost 0.5%.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
March 05, 2021 04:54 ET (09:54 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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