US stock futures were flat in overnight trading on Monday after rising bond yields squeezed pockets of growth in the market.
Dow Jones Industrial Average futures were down just 4 points. S&P 500 futures were flat, and Nasdaq 100 futures were down 0.1%.
The 10-year treasury bond yield It rose on economic optimism and inflation fears, briefly reaching 1.5% on Monday, the highest level since June.
Stocks had a mixed session amid the sharp rise in interest rates.
On Monday, the Dow Jones Industrial Average rose 71 points, and the small-cap Russell 2000 rose 1.5%. With that said, the S&P 500 was down 0.3%. The Nasdaq Composite was a relatively underperformer, down 0.5%, as a drop in bond prices pressured growth names like Microsoft And Amazon.
“The stock market is increasingly indicating that the US economy has entered another reopening cycle,” said Jim Paulsen, senior investment analyst at Leuthold Group.
“The rebound in economic activity led by the Covid virus may exacerbate supply chain problems and eventually fuel inflation fears. But, for now, it is forcing investors to reassess whether they have too much in growth and technology and not enough in economically sensitive investments,” Paulsen added.
Traders were also studying the testimony of Federal Reserve Chairman Jerome Powell. In prepared remarks due to be delivered on Tuesday, the head of the central bank said He said inflation could continue for longer than expected.
“Inflation is high and will likely remain so in the coming months before it subsides,” Powell said. “As the economy continues to open up and spending picks up, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than expected, but will diminish, as it happens, inflation is expected to decline toward our long-term target. of 2 percent.
The central bank signaled last week that it was ready to begin “tapering” – the process of slowly undoing the stimulus they provided during the pandemic. The Fed left interest rates unchanged but unchanged Maybe raise the interest rate once in 2022, followed by three in 2023 and 2024.
The prospect of a government shutdown also hung over the market on Monday.
Lawmakers must work on a funding plan before the government faces Friday’s shutdown. While there may be a temporary solution to extending the financing, the larger problem of raising the debt ceiling may not be resolved for several more weeks.
Wall Street is also looking forward to Thursday, when the House of Representatives is expected to vote on 1 trillion dollar infrastructure bill bipartisan Already approved by the Senate.
Thursday marks the last day of trading in September and the third quarter. The Dow is down 1.4% for the month, and the S&P 500 is down 1.8%. The Nasdaq Composite lost 1.9% in September.
The Covid-19 delta variable, the Fed’s tiered plan and inflation have investors worried. However, the Dow is still up about 14% year-to-date despite the weakness in September. The S&P 500 and Nasdaq also rose sharply.
“I think the wall of anxiety just kept growing,” Ally Invest’s Lindsey Bell told CNBC.closing bell“Monday.” While there are very legitimate concerns by market participants, I think the only thing… is consumer power. While inflation may come, the consumer has been resilient.”
– With a report from Patti Doom on CNBC.
Correction: An earlier version misspelled Lindsey Bell’s name.