Inventory futures push decrease as bond yields climb and oil hovers close to $121 a barrel

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US stock futures were moving lower on Wednesday, as bond yields remained elevated and oil prices inched toward $121 a barrel.

  • S&P 500 futures ES00, -0.38% fell 0.5% to 4,137

  • Dow Jones Industrial Average futures YM00, -0.43% fell 172 points, or 0.5%, to 32,993

  • Nasdaq-100 futures ES00, -0.38% fell 0.4% to 12,656

On Tuesday, the Dow industrials DJIA, +0.80% climbed 264.36 points, or 0.8%, to close at 33,180.14. The S&P 500 SPX, +0.95% rose 1% to 4,160.68. The Nasdaq Composite COMP, +0.94% gained 113.86 points, or 0.9%, to end at 12,175.23.

What’s driving markets?

A follow-up to those gains could be a tough order as Treasury yields and oil prices rose, and as investors looked ahead to Friday’s consumer price data for May. Wholesale inventories are the only data on tap for Wednesday and due at 10 am Eastern.

The Organization for Economic Cooperation and Development slashed its global growth forecast for this year to 3% from 4.5%, and predicted growth would slow to 2.8% in 2023, as it cited “a new set of adverse shocks” from Russia’s invasion of Ukraine and China’s COVID-related lockdowns.

The OECD’s forecast is close to the 2.9% growth the World Bank predicted Tuesday for this year.

“The unmistakable contrast between downbeat global growth assessments and central banks’ monetary-tightening push could be a significant headache for stock pickers,” said Stephen Innes, managing partner at SPI Asset Management.

Reading: Inflation is coming for middle-class households as higher prices hit big-box stores. Will they cut back on discretionary purchases?

“With monetary policy feeding lower growth expectations, there is an elevated level of negative circulation here. Central banks continue to surprise to the hawkish side with no end in sight until inflation moves convincingly toward its target,” said Innes. “And while those tighter financial conditions are the obvious path toward lower inflation, they are also analogous to lower asset prices.”

The Central Bank of India followed up Tuesday’s bigger-than-expected hike in interest rates from the Reserve Bank of Australia, with an increase in its repo rate to curb rising inflation. The European Central Bank will meet Thursday, but is expected by some to hold off any hike until July.

The yield on the 10-year Treasury note TMUBMUSD10Y, 3.010% rose 4 basis points to 3.008%, while the 2-year Treasury note TMUBMUSD02Y, 2.745% rose 2 basis points to 2.745%.

And US crude oil prices CL.1, +1.17% rose 1% to $120.71 a barrel, while global benchmark Brent crude rose 0.8% to $121.59 a barrel.

Reading: Here’s why the stock market gets ‘squirrelly’ when bond yields rise above 3%

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