Megacap stocks lose ground as yields rise, economic data awaited
U.S. 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.
After posting a loss in the previous quarter, the benchmark S&P 500 index has gained 5.7 percent so far this week as yields fell for two straight sessions on softer U.S. 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 percent and 0.9 percent in premarket trading.
Twitter Inc also lost momentum in line with its peers, a day after surging 22 percent 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 percent 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 percent, S&P 500 e-minis were down 27.25 points, or 0.72 percent, and Nasdaq 100 e-minis were down 82 points, or 0.7 percent.
Emerson Electric Co gained 2.2 percent 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 percent to 3.2 percent, tracking a jump in their Hong Kong counterparts.
