US pre-open: Futures in the red as Treasury yields rise

(Sharecast News) - Wall Street futures were in the red ahead of the bell on Thursday as rising Treasury yields were in focus. As of 1220 BST, Dow Jones futures were down 0.16%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.15% and 0.19% lower, respectively.

The Dow closed 172.13 points higher on Wednesday, extending the blue-chip's winning streak to a sixth session.

The yield on the benchmark ten-year Treasury note was drawing an amount of investor attention prior to the open on Thursday, climbing more than three basis points and above the key 4.5% mark at 4.515%, while its two-year counterpart also advanced to roughly 4.855%. Investors have been keeping a keen eye on treasury yields as questions remain on when exactly the Federal Reserve will look to cut rates.

Trade Nation's David Morrison said: "US stock index futures continued to trade sideways yesterday, and are little-changed in early trade this morning. This consolidation follows a strong start to the month in response to a difficult April. The catalyst for the recovery in equities proved to be last week's dovish FOMC meeting followed by Friday's non-farm payroll release. Both events helped to calm investors' nerves. The former by suggesting that the Federal Reserve wasn't considering a rate hike, despite this year's upward trend in inflation. The latter as the softer-than-expected jobs data dampened concerns over wage-driven inflationary pressures and so boosted hopes for rate cuts later this year.

"Yields on US Treasuries have pulled back from the multi-month highs seen in April, and this should help to support equity prices. But it's difficult to see where the catalyst for the next rally may come from. While the first quarter earnings season pushes further along into the home straight, there's nothing potentially market-moving until NVIDIA reports on 22 May. As far as significant economic news is concerned, there's a bit of gap now until the release of US producer prices next Tuesday and consumer prices the following day. Given the importance of these two updates, it shouldn't be a surprise if US equities continue to consolidate ahead of their release, with the likelihood of a downward bias."

Earnings were also in focus on Thursday, with Airbnb trading lower as weak guidance overshadowed a Q1 beat on both the top and bottom lines, while retail trading platform Robinhood was in the green on the back of first-quarter earnings and revenue that came in ahead of estimates.

Still to come, Warner Brothers Discovery will report earnings during the session.

On the macro front, weekly jobless claims data from the Labor Department will be out at 1330 BST, while Federal Reserve Bank of San Francisco president Mary Daly will deliver a speech at 1900 BST.

Reporting by Iain Gilbert at Sharecast.com