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Market Snapshot: Stock futures bounce as bond yields pull back

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Stock-index futures edged higher Friday, signaling the market would attempt to bounce after a sharp rise in bond yields was blamed for sending equities, particularly tech shares, to losses in the previous session.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.00%

    rose 39 points, or 0.1%, to 32,804.
  • S&P 500 futures
    ES00,
    +0.10%

    rose 9 points, or 0.2%, to 3,915.
  • Nasdaq-100 futures
    NQ00,
    +0.33%

    were up 57.25 points, or 0.5%, at 12,837.

On Thursday, stocks stumbled, with the Nasdaq Composite
COMP,
-3.02%

falling 3% as it suffered the brunt of selling pressure as bond yields rose. The Dow Jones Industrial Average
DJIA,
-0.46%

gave up a gain to end lower, while the S&P 500
SPX,
-1.48%

also slumped as a sharp selloff by oil futures dragged down energy shares.

What’s driving the market?

Bond yields remain the main driver for financial markets, analysts said. The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.691%

fell 2.9 basis points to 1.69%. Yields and bond prices move in opposite directions.

A jump in yields on Thursday hit tech-related and other growth stocks, whose high valuations rely on expectations for earnings far into the future. The move came after the Federal Reserve struck a dovish tone on Wednesday.

“Although the Fed couldn’t have sounded more dovish this week, Powell and his colleagues have inadvertently given the green light for yields to continue surging by signaling that they are happy to let inflation overshoot their target as they prioritize growth and employment,” said Raffi Boyadjian, senior investment analyst at XM, in a note.

Read: The Fed is dovish but bond yields soared. What gives?

Despite Friday’s modest pullback by Treasury yields, “it’s hard to see this rout in bonds subsiding soon,” Boyadjian said. “Without clear communication from the Fed on how far it is willing to see financial conditions tighten before it identifies the moves as disorderly, yields may keep on rising until markets find out what the central bank’s tolerance threshold is.”

Friday marks quadruple-witching day, a term that refers to the simultaneous expiration of stock-index futures contracts, options on those contracts, single-stock futures and stock options. The quarterly event can sometimes lead to volatility.

Oil futures also bounced after tumbling by as much as 7% in the previous session, dragging down the energy sector.

Which companies are in focus?
  • Shares of Nike Inc.
    NKE,
    -1.14%

    were down 3.3% in premarket trade after the athletic apparel company said late Thursday that sales grew slower than expected in the fourth quarter due to supply-chain disruptions, while earnings topped estimates.
  • FedEx Corp.
    FDX,
    -0.88%

    late Thursday reported fiscal third-quarter profit and sales that easily topped Wall Street forecasts, saying that it expects demand for its logistics and delivery business “to remain very high for the foreseeable future.” Shares were up 4%.
How are other markets trading?
  • The ICE U.S. Dollar Index
    DXY,
    +0.09%
    ,
    a measure of the currency against a basket of the greenback’s six major rivals, was up 0.1%.
  • Oil futures were higher after Thursday’s slump, with the U.S. benchmark
    CL.1,
    +0.55%

    up 0.5% at $60.36 a barrel.
  • Gold futures edged higher, with the April contract
    GCJ21,
    +0.09%

    up 0.2% to $1,735.70 an ounce.
  • In Europe, the Stoxx 600 index
    SXXP,
    -0.38%

    was down 0.4%, while London’s FTSE 100
    UKX,
    -0.77%

    shed 0.8%.
  • In Asia, the Shanghai Composite
    SHCOMP,
    -1.69%

    dropped 1.7%, Hong Kong’s Hang Seng Index
    HSI00,
    +1.30%

    fell 1.4% and Japan’s Nikkei 225
    NIK,
    -1.41%

    dropped 1.4%.

Europe Markets: European stocks fall as inflation and oil demand weigh on markets

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