Dow Jones futures were little changed early Thursday while S&P 500 futures fell solidly and Nasdaq futures tumbled, as the 10-year Treasury yield moved above 1.7% for the first time since January 2020. That comes amid concerns that the Federal Reserve and other central banks will let inflation pick up too fast.
That’s a reversal from Wednesday, when a dovish Fed meeting policy statement and comments from Fed chief Jerome Powell spurred a stock market rally. The Dow Jones hit a record while the Nasdaq reversed higher as Treasury yields pared sharp gains.
Williams-Sonoma (WSM), Five Below (FIVE) and Upstart Holdings (UPST) headlined key earnings after the close. Meanwhile, Translate Bio (TBIO) and Lordstown Motors (RIDE) also moved on news.
Treasury Yields Spike
The 10-year Treasury yield jumped 10 basis points to 1.74%, as the day two reaction to the Fed meeting was a lot different than on Wednesday. On Wednesday, the Federal Reserve signaled it won’t start rate hikes before 2024, unchanged from before. Fed chief Jerome Powell said it’s not time to talk about tapering the central bank’s big asset purchases.
That’s despite more bullish economic forecasts, as coronavirus restrictions wane and stimulus checks go out from the new $1.9 trillion spending package.
The Fed sees 2.4% inflation this year, but cooling to 2% in 2022. The Fed has a 2% inflation target, but says it’s OK with price increases exceeding that level for a short time.
The 10-year Treasury yield hit 1.69% before the Fed meeting announcement. The 10-year yield ended up 2 basis points to 1.64%, slightly below were it was before the 2 p.m. ET Fed announcement.
But while the Fed’s calm over inflation soothed investors on Wednesday, that didn’t last long.
If the Fed isn’t worried about inflation, bond traders will. With commodity prices high and U.S. retail gasoline prices now up for 46 straight days, some underlying inflation pressures are bubbling up.
Dow Jones Futures Today
Dow Jones futures were just below fair value. S&P 500 futures fell 0.7%. Nasdaq 100 futures plunged 1.7%. The Nasdaq composite will likely test its 50-day moving …….