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Market Snapshot: ‘Bear squeeze?’ U.S. stock futures rise after recent weak spell

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U.S. stock futures advanced Thursday, as investors debate how far the retreat in equities will go as bond yields surge.

What’s happening
  • Futures on the Dow Jones Industrial Average YM00, +0.46% rose 110 points, or 0.3%, to 35020
  • Futures on the S&P 500 ES00, +0.55% rose 0.4%, or 17 points, to 4542
  • Futures on the Nasdaq 100 NQ00, +0.84% gained 0.6%, or 93 points, to 15127

On Wednesday, the Dow Jones Industrial Average DJIA, -0.96% fell 340 points, or 0.96%, to 35029, the S&P 500 SPX, -0.97% declined 44 points, or 0.97%, to 4533, and the Nasdaq Composite COMP, -1.15% dropped 167 points, or 1.15%, to 14340.

The S&P 500 has dropped 5% this year.

What’s driving markets

U.S. stocks have struggled since the beginning of the year as bonds have sold off. The yield on the benchmark 10-year Treasury TMUBMUSD10Y, 1.835% has surged 33 basis points this year, and the key 10-year German TMBMKDE-10Y, -0.025% bund yield turned positive for the first time in three years on Wednesday.

Michael Brown, senior market analyst at Caxton FX in London, said sentiment remains fragile. “Selling pressure has been intense over the last couple of weeks, albeit slightly less so yesterday, and little on the fundamental side has shifted over the last 24 hours. As such, we cannot rule out any near-term gains being a ‘bear squeeze rally’, which may allow new shorts to soon enter the market, particularly if rates continue to tear higher,” said Brown.

There’s more earnings on tap, notably from regional banks and, after the close, streaming giant Netflix NFLX, +0.99%. The economics calendar includes weekly jobless claims, the Philadelphia Fed manufacturing index and existing home sales.

Markets also are paying attention to geopolitical worries, with Russia stationing troops along the border of Ukraine. “My guess is he will move in.  He has to do something,” said U.S. President Joe Biden of Russian President Vladimir Putin at a press conference on Wednesday.

The People’s Bank of China cut a key interest rate for the first time in two years, as the Hang Seng HSI, +3.42% surged more than 3%.

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