Market Overview

Stock futures choppy Friday after Nasdaq suffers worst one-day loss since October

Futures contracts tied to the major U.S. stock were volatile in early morning trading on Friday after a pop in interest rates a day earlier helped push the Nasdaq Composite to its worst session since October. Dow Jones Industrial Average futures implied an opening drop of more than 100 points. S&P 500 futures and Nasdaq 100 futures both traded lower. Contracts tied to all three indexes appeared to rise and fall in tandem with the movements of the 10-year Treasury note yield.

The moves in equity futures came after a negative regular trading session on Thursday. The Dow Jones Industrial Average dropped 559 points, or 1.8%, pulling back from a record high. The S&P 500 lost 2.5% to clinch its worst day since Jan. 27 while the tech-heavy Nasdaq Composite shed 3.5% and suffered its biggest one-day sell-off since Oct. 28.

The momentum that carried stocks to all-time highs earlier this month has met resistance amid a sudden and pronounced rise in bond yields. The rate on the U.S. 10-year Treasury note briefly soared as high as 1.6% on Thursday before simmering back down to around 1.52%, its highest level since February 2020. The 10-year yield, last seen around 1.46%, is up more than 50 basis points since the year began, a rapid rise for a bond rate used as a benchmark for mortgage rates and auto loans.

Economists and investment managers say the rise in rates is an appropriate reaction by the bond market to positive economics as vaccines are rolled out and GDP forecasts improve, which should benefit corporate profits.

Stock futures choppy Friday after Nasdaq suffers worst one-day loss since October, CNBC, Feb 26

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