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U.S. equity futures nudged lower Thursday, while Treasury yields and the dollar held steady, as investors hit pause on Wall Street’s solid November rally while again tracking moves in the bond market ahead of jobless claims data and a new 20-year auction.
Stocks booked modest gains last night, powered in part by softer-than-expected factory gate inflation data and solid third quarter earnings from Target TGT, but gave back gains later in the session as a robust reading for core October retail sales kept inflation concerns at low-boil and triggered a snap-back in Treasury bond yields.
Benchmark 10-year notes were pegged at 4.504% heading into the New York session, around 6 basis points higher from levels seen just after Tuesday’s consumer price inflation print, which showed core pressures easing to a fresh 2-year low of 4%.
At the same time, 2-year notes were marked a 4.888%, modestly lower from last night’s levels, while the U.S. dollar index held steady against a basket of its global peers at 104.402.
The Labor Department’s weekly reading of new jobless claims, as well as a $13 billion auction on new 20-year notes, will be closely-watched for signs of underlying inflation pressures or weak foreign demand, and could trigger moves in the bond market that may ripple into stocks throughout the session.
Walmart WMT will also publish its third quarter earnings update prior to the opening bell, with analysts looking for a bottom line of $1.52 per share on revenues of $159.5 billion.
Broader market sentiment may find comfort in a productive, but by no means breakthrough meeting between President Joe Biden and President Xi Jinping at the APEC summit in San Francisco, where the two leaders pledged more direct communication between militaries and a crackdown on fentanyl production.
A late Wednesday vote in the Senate also looks to have averted a weekend government shutdown, with lawmakers supporting the Republican-led stopgap bill that funds the government at current levels until early January.
President Biden is expected to sign the bill in the coming days.
Heading into the start of the trading session on Wall Street, futures contracts tied to the S&P 500, which is now up 10% from its recent October lows, are priced for a modest 2 point decline, while those linked to the Dow Jones Industrial Average suggest a 4 point dip.
Mega-cap tech stock weakness kept gains for the Nasdaq in check yesterday, and futures suggest the sector benchmark will slip 25 points at the start of trading amid declines for Tesla TSLA, Cisco Systems CSCO and Nvidia NVDA.
In overseas markets, Europe’s Stoxx 600 was marked 0.3% lower in early Frankfurt trading, while Britain’s FTSE 100 slipped 0.44% in London amid a nearly 7% slump for luxury brands group Burberry plc.
Overnight in Asia, the steepest fall in China house prices since 2015, as well as a pullback in property investment, underscored weakness in the real estate sector and tipped domestic stocks firmly into the red, with the region-wide MSCI ex-Japan index falling 0.27% into the close of trading.
Slowing export growth and concerns linked to invention to support the weakened yen pushed the Nikkei 225 into a 0.28% decline on the session.
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