U.S. stock index futures were mostly down slightly Thursday after the Dow Jones Industrial Average closed at a record high.
Futures contracts tied to the Dow were bouncing between slight gains and losses. S&P 500 futures lost 0.3%. Nasdaq 100 futures shed about 1% as tech stocks came under pressure again. Shares of Tesla and Facebook fell in premarket trading.
On the data front, initial jobless claims numbers will be released at 8:30 a.m. ET on Thursday, with economists surveyed by Dow Jones expecting a print of 845,000. Also at 8:30 a.m. ET the U.S. Department of Commerce will release its second estimate for fourth-quarter GDP.
The 10-year Treasury yield hit 1.46% on Thursday morning, the highest level since February 2020. The benchmark rate has risen 35 basis points this month. Higher rates could spur investors to rotate out of stocks and into bonds, and they could also hit the growth-oriented technology sector especially hard.
“Our base case is that rates will continue to rise due to increasing growth and inflation expectations and, eventually, Federal Reserve normalization,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe if rates move too high too fast, the Fed will intervene to make sure rising rates don’t become too restrictive and disrupt equity markets or the real economy.”
Some traders looked past the surge in yields after Federal Reserve Chair Jerome Powell emphasized the central bank’s commitment to easy policy and downplayed the risk of inflation, saying it could take three years or more before the Fed’s goals are reached.
On Wednesday, the Dow jumped 425 points to close at a record high in a volatile session that at one point saw the 30-stock average drop more than 110 points. The S&P 500 advanced 1.1%, while the Nasdaq Composite wiped out a 1.3% loss to close 1% higher.
“It seems pretty clear to us that the move in rates has been driven by growing optimism about economic growth, and rates are finally ‘catching up’ to the bullish growth outlook in equities,” said David Lefkowitz, head of equities Americas at UBS Global Wealth Management. “So equity investors should not be overly concerned.”
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U.S. stock index futures were mixed in early morning trading Thursday.