U.S. stock futures were stable in Monday night trading as bond yields rose which put pressure on market growth pockets.
The Dow Jones Industrial Average futures are down just 4 points. The S&P 500 futures were flat, and the Nasdaq 100 futures were down 0.1%.
The 10-year Treasury yield rose amid economic optimism and inflation fears, briefly peaking at 1.5% on Monday, the highest level since June.
Equity has seen an uneven session amid rate hikes.
On Monday, the Dow Jones Industrial Average rose 1 point and small-cap Russell rose 20.5%. However, the S&P 500 declined 0.3%. The Nasdaq Composite was relatively low, dipping 0.5% as bond price declines put pressure on growth names like Microsoft and Amazon.
“The stock market’s growing indications are that the U.S. economy has entered another re-opening cycle,” said Jim Paulsen, chief investment strategist at Leuthold Group.
“Covid-led revival in economic activity could exacerbate supply chain problems and eventually rekindle inflationary concerns. But, for now, it has forced investors to reconsider that their growth and technology are not high enough and economically sensitive.” Added.
Traders were also upset by the testimony of Federal Reserve Chair Jerome Powell. In a preparatory remark on Tuesday, the central bank chief said inflation could be more protracted than expected.
“Inflation has risen and will continue to do so in the coming months before it becomes moderate,” Powell said. “As the economy rebounds and re-spends, we are seeing upward pressure on prices, especially due to supply disruptions in some sectors. These effects have been bigger and longer than expected, but they will subside and as they will, inflation is expected to Long runs will return to the 2 percent target. “
The central bank indicated last week that it was ready to start “tapping” – the process of slowly bringing back the stimulus they provided during the epidemic. The Fed left rate unchanged but is projected to raise interest rates perhaps in 2022, followed by three in 2023 and 2024.
The possibility of a government shutdown also clouded the market on Monday.
Lawmakers must work on a funding plan before the government faces closure on Friday. While raising funds may be a temporary solution, raising the debt limit will not solve the problem for a few more weeks.
Wall Street is also looking forward to Thursday, when the House is expected to vote on a অব 1 trillion bilateral infrastructure bill already approved by the Senate.
Thursday marks the last day of the September transaction and the third quarter. The Dow is down 1.4% for the month, and the S&P 500 is up 1.8%. The Nasdaq Composite lost 1.9% in September.
The Covid-1 del Delta variant, the Federal Reserve’s tapping plan and inflation have worried investors. However, despite the weakness in September, the Dow is still up about 14% year-over-year. The price of S&P 500 and Nasdaq is also much higher.
“I think the walls of thought continue to grow,” Lindsay Bell of Eli Investments told CNBC’s “Closing Bell” on Monday. “Although there are very legitimate concerns by market participants I think one thing is … consumer power. Although inflation could come, the consumer was resilient.”
– Including reporting from CNBC’s Patty Dome.
Correction: An earlier version misspelled Lindsay Bell’s name.