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U.S. stock futures pointed to modest to slight gains Thursday morning, led by technology shares, which led the market south Wednesday after red-hot inflation data sent Treasury yields soaring.
Signs that troubled China real estate group Evergrande has again avoided a default also were credited for improving sentiment on Wall Street.
How are stock-index futures trading?
-
Dow Jones Industrial Average futures
YM00,
+0.07%
rose 25 points, or 0.1%, to 36,017. -
S&P 500 futures
ES00,
+0.35%
were up 17 points, or 0.4%, at 4,659. -
Nasdaq-100 futures
NQ00,
+0.77%
gained 129.75 points, or 0.8%, to 16,110.50.
On Wednesday, the Dow Jones Industrial Average
DJIA,
fell 240 points, or 0.7%, while the S&P 500
SPX,
fell 0.8% and the Nasdaq Composite
COMP,
slumped 1.7%.
What’s driving the market?
Stocks tumbled Wednesday after October consumer prices surged 0.9%, well above forecast, and annual inflation climbed 6.2%, a more-than-three-decade high. The data sparked fears the Federal Reserve may have to act faster and more aggressively to rein in inflation, with investors fleeing into gold, the dollar and cryptocurrencies.
Hardest hit was the Nasdaq Composite, which saw its worst session since Oct. 4—as its technology and growth-geared stocks are viewed as more sensitive to higher interest rates. Investors were also dealing with a poorly received 30-year government bond auction.
Bond markets are closed for the Veterans Day holiday, but Wednesday saw the 10-year
TMUBMUSD10Y,
and 30-year Treasury note
TMUBMUSD30Y,
yields surge. Gold prices continued to push higher, after the biggest gains since mid-June on Thursday, while the dollar also rose.
The rise in yields marked a bounce from a sharp two-week decline that wasn’t based on fundaments and was, therefore, unlikely to last, said Tom Essaye, founder of Sevens Report Research, in a note.
“During that period, tech rallied and led markets higher, and we’re seeing both trades now unwind. And given techs large weighting, that will be a headwind on the S&P 500,” he said.
“But unless the Fed starts strongly hinting at an accelerated taper or a much- sooner-than-expected rate hike, we do not see yesterday’s hot CPI or rise in yields as a reason to get more defensive,” he said, arguing it was instead reminder of the dominant trends in the market: above-normal inflation and rising yields.
See: Hot inflation undercuts one of the main arguments against stocks, strategist says
One lift for sentiment appeared to come from China’s property sector. “Chinese equities are up 2% today on the news that the battled real-estate developer Evergrande
3333,
managed to pay overdue interest on three bonds worth $148 million,” said Saxo Bank’s chief investment officer, Steen Jakobsen, who noted that was also aiding sentiment for U.S. equity futures.
A softer stance from officials there on the sector also helped rally those stocks, said Marios Hadjikyriacos, senior investment analyst at XM, in a note to clients. “Beijing is apparently prepared to relax the rules around how much leverage property developers can take on, allowing distressed companies some breathing room,” he said.
Read: China’s Evergrande once again sidesteps default, while sector rallies on signs of Beijing ease
What companies are in focus?
-
Tesla Inc.
TSLA,
+4.34%
shares rose more than 3% in premarket trading. Securities and Exchange Commission fillings on Wednesday afternoon showed Musk selling more than 4.5 million shares for close to $5 billion. -
Walt Disney Co.
DIS,
-0.38%
stock was down more than 4% after the entertainment giant disappointed on theme park revenue and subscriber numbers for its Disney+ streaming service. -
Beyond Meat Inc.
BYND,
-3.58%
shares tumbled 18% after a weak quarter and poor outlook from the plant-based burger maker. -
Lordstown Motors Corp.
RIDE,
-2.28%
shares rallied 13% after the electric-vehicle maker announced a $230 million deal to sell its plant to Foxconn. -
SoFi Technologies Inc.
SOFI,
-7.77%
stock climbed 16% after the financial-technology company’s better-than-expected earnings, strong member growth and product uptake numbers.
How are other assets trading?
-
The ICE U.S. Dollar Index
DXY,
+0.20% ,
a measure of the currency against a basket of six major rivals, rose 0.2% after hitting a 15-month high on Wednesday. -
The U.S. benchmark crude contract
CL00,
-0.33% CLZ21,
-0.33%
fell 80 cents to $80.54 a barrel. Gold futures
GC00,
+1.02%
climbed 0.9%, to $1,864.90 an ounce. -
The Stoxx Europe 600
SXXP,
+0.26%
rose 0.2%, while London’s FTSE 100
UKX,
+0.38%
rose 0.3%. -
Hong Kong’s Hang Seng Index
HSI,
+1.01%
rose 1% and China’s CSI 300 Index
000300,
+1.61%
rose 1.6%, while Japan’s Nikkei 225
NIK,
+0.59%
gained 0.6%.
