U.S. equity futures extended declines Thursday, following on from the worst day for tech stocks since February, as another move higher in Treasury bond yields, as well as the threat of a ground assault on Gaza by Israeli forces, pounds investor sentiment ahead of another key session on Wall Street.
Tech stocks were crush yesterday, with the Nasdaq falling 2.4% and sliding into correction territory – defined as a 10% decline from a recent high – in the wake of a disappointing earnings report from Alphabet (GOOGL) – Get Free Report that loped $166 billion in market value from the Google parent.
A muted outlook from Meta Platforms META last night looks to add to the tech gloomy as the social media giant crushed Street earnings forecasts, but said near-term ad sales could be affected by broader macro conditions, which is hinted were already weakening.
Treasury bond yields, meanwhile, were marching higher again in overnight trading, with 10-year notes testing the 5% mark, which it breached for the first time since 2007 earlier this week, following a disappointing auction of $52 billion in 5-year notes yesterday alongside stronger-than-expected new homes sales for the month of September.
Benchmark 2-year notes, meanwhile, were marked at 5.118% in the overnight session while the U.S. dollar index tested multi-month highs against its global peers at 106.775 after moving past the 150 mark against the Japanese yen.
Bond and currency markets are also likely to be active today with a key intertest rate decision from the European Central Bank prior to the start of U.S. trading and weekly jobless claims data, alongside a first look at third quarter GDP at 8:30 am Eastern time.
Market volatility gauges are also on the move, with the CBOE’s VIX index up $2.45 to $21.42 a level that suggests daily swings of around 56 points, or 1.34% , for the S&P 500 over the next thirty days.
Heading into the opening hour of the trading day on Wall Street, futures contracts tied to the S&P 500, which is down 2.36% for the month, are priced for a 23 point opening bell decline while those linked to the Dow Jones Industrial Average are priced for an 85 point pullback.
The tech-focused Nasdaq is looking at around 130 point decline, with Meta shares falling 2.85% in pre-market trading and Alphabet down around 1.93%.
In overseas markets, the region-wide Stoxx 600 fell 0.96% in early Frankfurt trading, lead to the downside by banks and financials, ahead of the ECB rate decision at 8:15 am eastern time.
Overnight in Asia, markets were one edge for currency market intervention from the Bank of Japan after the yen fell through the 150 mark against a surging dollar, with the Nikkei 225 also slumping 2.14% following last night’s sell-off on Wall Street.
The region-wide MSCI ex-Japan benchmark, meanwhile, fell 1.2% to a fresh one-year low heading into the close of trading.
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