Traders working at the New York Stock Exchange (NYSE), on Sept. 20th, 2023.
NYSE
Stock futures fell Thursday, deepening losses for the week, as Treasury yields climbed to multi-year highs investors amid the Federal Reserve’s plan to keep interest rates at higher levels for longer.
Futures tied to the Dow Jones Industrial Average were lower by 169 points, or 0.5%. S&P 500 futures lost 0.8%, while Nasdaq 100 futures slid by 1.2%. All three major benchmarks headed for their third negative session in a row.
The 10-year Treasury yield hit 4.48%, its highest in more than 15 years, with the latest catalyst being weekly jobless claims data showing a still strong labor market that could encourage the Fed to stay in hiking mode. Weekly jobless claims decreased by 20,000 to 201,000 for the week ending Sept. 16, much lower than the 225,000 claims expected by economists polled by Dow Jones. It was the lowest volume of new unemployment claims since January.
The 2-year yield topped 5.19% after the jobs data Thursday, also the highest levels seen since 2007.
The three major averages closed at session lows Wednesday after the Federal Reserve said it would leave interest rates unchanged, but forecast another rate hike before the end of the year. The central bank also indicated fewer rate cuts next year, essentially saying it would need to keep rates higher for longer because stubborn inflation.
Fed Chair Jerome Powell commented after the decision that a soft landing for the economy was still possible, but not his baseline scenario.
“Certainly, Powell highlighted some of the numerous headwinds and an ability to move carefully,” said Jamie Dutta, market analyst at Vantage. “But the market is running with an economy that appears to have significant momentum and stronger growth that will need higher rates for a prolonged period.”
Tech shares have led the losses this week as investors rethink buying growth-oriented stocks if interest rates remain high. Tesla, Alphabet, Meta Platforms and Nvidia were among those lower in premarket trading Thursday.
Marketing automation firm Klaviyo, which debuted on the public markets Wednesday, slipped nearly 2% in the premarket Thursday. That made the stock the latest in a string of promising IPOs that turned lower this week.
FedEx bucked the negative trend, gaining 5% after the delivery company posted adjusted earnings of $4.55 per share in its fiscal first quarter, while analysts called for $3.73 per share, per LSEG.
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