U.S. stocks have lost ground in each of past three weeks


U.S. stock futures moved higher early Monday, attempting to find their footing after a third-straight losing week attributed to a surge in bond yields and worries about China’s economy that have been amplified by worries over the country’s property sector.

What’s happening

  • S&P 500 futures ES00, +0.29% rose 20 points, or 0.5% to 4,402.75.
  • Dow Jones Industrial Average futures YM00, +0.12% gained 110 points, or 0.3%, to trade at 34,675.
  • Nasdaq-100 futures NQ00, +0.50% rose 96 points, or 0.7% to 14,840.

On Friday, the S&P 500  SPX booked a third straight week of losses, with the large-cap benchmark down 4.8% so far in August. The Nasdaq Composite  COMP  and Dow Jones Industrial Average  DJIA also finished Friday with weekly losses.

See: Rising yields put S&P 500 on pace for biggest monthly loss of 2023 as investors brace for Fed Chair Powell’s Jackson Hole speech

What’s driving markets

Futures are striving to find their footing as Wall Street comes off a three-week losing streak.

“Global markets have recently experienced a series of stumbles due to concerns about China’s economy and higher sovereign bond yields. Last week the S&P 500 dropped 2.1 %, worryingly, with every sector ending in the red,” noted Stephen Innes, managing partner at SPI asset management.

A trimming of interest rates over the weekend by China’s central bank has underwhelmed the market, while the 10-year Treasury yield is up about 4 basis points to 4.29%, holding near 15-year highs.

The rising borrowing costs have been a particular problem for some of the big technology stocks that tend to lead the market, according to Innes.

Last week saw several prominent stocks with the S&P 500, including Alphabet Inc. GOOGL, -1.89%, Tesla Inc. TSLA, -1.70%, Meta Platforms Inc. META, -0.65%, Amazon.com Inc. AMZN, -0.57%, Microsoft Corp. MSFT, -0.13%, Apple Inc. AAPL, +0.28%, and Nvidia Corp. NVDA, -0.10%, “all underperformed compared to the broader market index,” Innes said. “This dip in performance is attributed to the recent surge in interest rates…This upward rate movement has exerted downward pressure on longer-duration assets.”

With that in mind, the reception afforded Nvidia’s results, due on Wednesday, may shape market sentiment for a while. The chip maker is among the stragglers of an earnings season that has generally beaten forecasts but failed to deliver additional bullish propulsion to the market.

Need to Know: The history of companies with Nvidia-like valuations isn’t a good one

“This picture simply means that the fear of a further Fed tightening, prospects of higher interest rates, combined [with] the set of bad news from China simply didn’t let investors enjoy the better-than-expected earnings,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

However, Tom Lee, head of research at Fundstrat, reckons the recent selloff will be halted at or before Federal Reserve Chairman Jay Powell makes a speech at the Jackson Hole symposium at the end of the week.

“Over our many conversations with institutional investors in the past week, the vast majority cite the rise in interest rates as the most concerning for equities,” Lee wrote in a note published over the weekend.

And he thinks the Fed is worried by the surge in 10-year yields, too, because it represents a meaningful tightening of financial conditions for markets, companies and households.

“I think the Fed likely says something dovish-ish [sic]. Why? Does Fed want to risk another ‘something breaking’ ala Feb 2023? While some look back at August 2022 when Fed Chair Powell’s statement was hawkish and marked the local top in 2022 (stocks fell -19% next 8 weeks), we think the context is the opposite.” Lee concluded.

See: Jackson Hole: Fed’s Powell could join rather than fight bond vigilantes as yields surge

Companies in focus

This article was originally published by Marketwatch.com. Read the original article here.

Previous article: DuPont confirms plans to sell 80.1% ownership interest in Delrin
Next articleEarnings Results: Palo Alto Networks earnings, outlook top Street expectations as SEC cyberattack reporting rule drives demand


Please enter your comment!
Please enter your name here