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U.S. equity futures edged lower in early Wednesday trading, extending a weekly decline that has mirrored a surge in Treasury bond yields and a lack of risk appetite amongst global investors heading into the final stretch of a deadlocked presidential election.
Stocks closed mixed over a muted Tuesday session, with the Nasdaq eking out a modest advance and the S&P 500 and the Dow Jones Industrial Average falling for a third consecutive session as investors digested a host of corporate earnings reports and Federal Reserve officials signaled a preference for a slow pace of rate cuts.
Election risks are also starting to affect markets, particularly in Treasury bonds, as investors see policies from both candidates as adding to the nation’s near $36 trillion debt burden and potentially stoking inflation as the economy continues to outperform.
“Whilst markets appear to be pricing in a Trump victory, this has so far been painful for US Treasuries, with yields rising on long term bonds as investors worry about the sustainability of the fiscal situation,” said Lindsay James, investment manager at Quilter Investors in London.
Tesla will post its highly-anticipated third quarter earnings after the closing bell.
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“With the Committee for a Responsible Federal Budget having warned that Trump policies could increase government debt by $7.5 trillion, compared to $3.5 trillion for Harris, it is clear that neither candidate is prepared to turn off the tap of spending – but could yet be forced by bond markets to reconsider,” she added.
Benchmark 10-year Treasury note yields, which has risen around 60 basis points since the Fed’s September rate cut, hit a fresh three month high of 4.231% in overnight trading, while 2-yeat notes pegged at 4.054%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.26% higher 104.351, the highest since late July.
Gold prices were also on the march, notching a fourth consecutive all-time high of $2,757.99 per ounce and putting the bullion on pace for its best year since 1979.
The sharp move higher in Treasury yields, and the surge in bond market volatility, will make this week’s round of earnings updates even more difficult to navigate, with Boeing (BA) , T-Mobile (TMUS) , Coca-Cola (KO) and AT&T (T) reporting before the bell and Tesla (TSLA) and IBM (IBM) slated for after the close of trading.
Related: Tesla stock price slides ahead of Q3 earnings
Heading into the start of trading on Wall Street, futures contracts suggest an 11 point opening bell decline, while those linked to the Dow indicate 200 point pullback.
The tech-focused Nasdaq, meanwhile, is called 65 points lower with Tesla, Nvidia (NVDA) and Intel (INTC) trading in the red.
Starbucks (SBUX) shares were a notable early mover, falling 5% to $91.94 each after the world’s biggest coffee chain pulled its 2025 profit guidance under new CEO Brian Niccol.
McDonald’s (MCD) shares were also deeply in the red, falling 7% to $292.56 each, after an E. coli outbreak lied to the restaurant chain’s U.S. operations killed at least one person and triggered serious illness in as many as 50 others.
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In overseas markets, the Stoxx 600 was marked 0.08% lower in early Frankfurt trading amid another active earnings session, with Britain’s FTSE 100 falling 0.24% in London.
Overnight in Asia, Japan’s Nikkei 225 slipped 0.8% lower into the close of trading while the regional MSCI ex-Japan benchmark rose 0.19%.
Related: Veteran fund manager sees world of pain coming for stocks
