U.S. stock futures slip as rising bond yields defy dour economic news from China and Europe.
How are stock-index futures trading
- S&P 500 futures ES00, -0.13% dipped 20 points, or 0.4%, to 4502
- Dow Jones Industrial Average futures YM00, -0.05% fell 119 points, or 0.3%, to 34763
- Nasdaq 100 futures NQ00, -0.25% eased 95 points, or 0.6%, to 15421
On Friday, the Dow Jones Industrial Average DJIA rose 116 points, or 0.33%, to 34838, the S&P 500 SPX increased 8 points, or 0.18%, to 4516, and the Nasdaq Composite COMP dropped 3 points, or 0.02%, to 14032. U.S. markets were closed on Monday for the Labor Day break.
What’s driving markets
U.S. traders return from the Labor Day break with global markets in a generally risk-off mood after more disappointing news from the world’s second biggest economy.
A Caixin survey showed China’s service sector expanded in August at its slowest pace in eight months, providing further evidence that the country’s post-pandemic recovery was faltering.
This was followed by a eurozone survey showing output in the bloc contracting at its fastest pace in nearly three years.
Asian and European bourses mostly turned lower, infecting U.S. equity index futures.
“Sentiment has turned downbeat again on China as fresh brushstrokes are painted on the picture of its slowing economy,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“The data has overshadowed relief that the struggling property giant Country Garden 2007, -0.98% has managed to make key interest payments on its debt, reducing, for now, concerns about contagion in the financial sector. China appears to be taking one step forward, but two steps back, as optimism one day turns to pessimism the next,” Streeter added.
Concerns about economic growth might be expected to support sovereign debt markets, but here too the tone was grim, with Treasury yields rising amid concerns recent increases in oil prices CL.1, -0.55% –though down a bit on Tuesday — may revive inflationary pressures.
“Oil prices have surged to reach new highs in 2023, a development poised to have significant repercussions on the upcoming August consumer price index reports…[which] presents a fresh challenge for central banks as they continue their diligent efforts to bring inflation levels back in line with their desired targets,” said Stephen Innes, managing partner at SPI Asset Management.
“This growing concern has notably impacted sovereign bonds, triggering a sell-off primarily driven by heightened inflation expectations. And, of course, stocks do not like the cut of that new inflation jib,” Innes added.
U.S. economic updates set for release on Tuesday include July factory orders, due at 10 a.m. Eastern.