U.S. stocks were poised for muted opening moves following Tuesday’s selloff, and government-bond yields extended their advance, as investors prepare for central banks globally to raise interest rates.
Futures for the S&P 500 fell 0.1% Wednesday. The benchmark gauge lost 1.8% on Tuesday, its second decline in three trading days, under pressure from stocks including Goldman Sachs Group and Moderna. Contracts for the technology-heavy Nasdaq-100 were flat Wednesday and Dow Jones Industrial Average futures slipped 0.1%.
Investors kept selling government bonds, pushing up yields. Yields on benchmark 10-year Treasury notes rose to 1.893%, compared with 1.866% Tuesday, which was their highest level since January 2020. Yields on interest rate-sensitive two-year notes rose to 1.063% from 1.038% Tuesday.
Europe’s most closely watched government bond yield turned positive for the first time since 2019. The yield on 10-year German bonds rose to 0.008% after trading in negative territory for over 30 months. Ten-year U.K. yields, meanwhile, rose to their highest level since March 2019 after data showed inflation in the country hitting a 30-year high.
Companies due to report earnings before the opening bell in New York includeMorgan Stanley,Bank of America and U.S. Bancorp, and household names United Health GroupandProcter & Gamble.United Airlines and Alcoaare set to post results after markets close.
In Tokyo,Sony Group lost 13% following gaming rival Microsoft’s deal to buy Activision Blizzard, maker of games including World of Warcraft and Call of Duty. The drop was Sony’s biggest since 2008.
European luxury-good stocks rose after Switzerland’s Cie. Financière Richemont reported forecast-beating results. Richemont shares added 9.5% and LVMH Moët Hennessy Louis Vuitton rose 3.4% in Paris.
Investors have stepped up bets that theFederal Reserve and other major central banks will tighten monetary policy in the coming months, withdrawing a pillar of support for markets. Mounting expectations of interest-rate rises follow evidence that the drivers of inflation have broadened beyond the supply-chain shock that fueled price gains for much of 2021.
Recent volatility is“really all about inflation and how aggressive central banks are going to be to counteract it,” said Brian O’Reilly, head of market strategy at Mediolanum Asset Management, adding that inflation could also curtail economic growth by knocking consumption. ”Certainly, the market is nervous at the moment.”
In the U.K., data out Wednesday showed consumer prices rising at 5.4% in December, the fastest rate since March 1992—shortly before the country was compelled to leave the European Exchange Rate Mechanism on ‘Black Wednesday.’ The pace of price growth was far above the 2% target set by the Bank of England, which in December became the first major central bank to raise rates since the start of the pandemic.
Investors will get a glimpse of the health of the U.S. housing market at 8:30 a.m. ET. Construction of new homes is forecast to have slowed in December as builders contended with shortages of materials and workers.
Oil prices rose again after touching seven-year highs Tuesday. Most-active U.S. crude futures rose 1.2% to $85.83 a barrel, extending a rally driven in part by the potential for supply disruptions in Russia and the Middle East.
Overseas stock markets were mixed following Tuesday’s selloff on Wall Street. The Stoxx Europe 600 slipped 0.1%, as losses for food-and-drink and insurance stocks balanced gains for retail, travel and leisure shares.
Asian stocks came under pressure. Japan’s Nikkei 225 skidded 2.8% as Sony slumped. China’s Shanghai Composite Index slipped 0.3%.