Stock futures falter on Dow Record

Contracts linked to the Dow Jones industrial average have fluctuated between gains and losses, suggesting that the blue-chip index could be dampened after closing at an everyday high on Wednesday.

Fresh data Thursday showed that weekly claims for unemployment fell to 730,000 for the week ended February 20, a decrease from the previous week and less than economists had expected. The US economy grew at an annual rate of 4.1% in the fourth quarter. New durable goods rose 3.4% in January for the ninth consecutive month as production continued.

Investors’ appetite for risky assets recovered on Wednesday on remarks by Federal Reserve Board Jerome Powell that the central bank would keep interest rates low for a while.

Yet the recent sharp rise in bond yields – which closed at its highest level in a year on Wednesday – has made some money managers more cautious. These investors are considering shifting funds to less risky assets, such as bonds, and to stocks with lower valuations than technology companies.

“The market is fierce. The increase in bond yields is putting pressure on equities, especially growth equities, ”says Sebastien Galy, a macro strategist at Nordea Asset Management. “There is a bit of risk reduction in general,” he added.

Optimism about the economic recovery is leading investors to shift funds to equities that are likely to benefit from a boom this year. It weighs the technology stocks, which drove much of the rally last year.

“The rise in bond yields is leading to this rotation, away from growth stocks and more in favor of value stocks,” said Lombard Odier cross-asset strategist Sophie Chardon. ‘The rise in yields is supportive for banks, and higher oil prices are supporting energy. This is a change of leadership. ”

Yields on the 10-year treasury note rose to 1,460%, from 1,388% on Wednesday. Government bond yields have increased as investors reduced their holdings of the safest assets.

Investors are also watching closely for signs of inflation that could jump to large doses of monetary and fiscal stimulus. At the same time, markets also became cautious as recent economic data showed that the rebound was likely to slow and stop.

Earnings Season is Declining: Airbnb,

Beyond Meat,

DoorDash and Salesforce.com will announce their results Thursday.

Stocks that were popular among Reddit users on the WallStreetBets forum rose in the last hour of trading on Wednesday, in volatility reminiscent of the activity seen last month. In pre-trading, GameStop climbed 55% and AMC Entertainment rose 11%.

The moves show ‘there is still liquidity and a lot of access to speculative betting’, said me. Chardon said. “We need to be prepared to live with this kind of targeted bubble, but I would not view it as a threat to the global stock market.”

Before the opening market, Moderna achieved more than 3% after announcing a plan to increase its manufacturing capacity of Covid-19 vaccines. Best Buy tumbled 5.4% after saying it expects a slowdown in sales growth in 2021.

Oil prices continued to rise, with Brent crude rising for the fourth day. The international benchmark for oil added 0.5% to $ 66.51 a barrel, almost the highest level since January 2020.

Overseas, the pan-continental Stoxx Europe 600 decreased by 0.1%.

Among the individual stocks, brewer Anheuser-Busch InBev fell nearly 5% after profits fell below estimates in the fourth quarter. British packaging company DS Smith has jumped more than 6% over reports that rival Mondi is investigating a takeover.

Investors have also been selling European government bonds in recent weeks as they look for higher returns. Yields on French 10-year bonds, which are reversing the price, have risen above zero for the first time since June, reaching 0.024%.

In Asia, most major benchmarks completed the day. The Shanghai Composite Index added 0.6% and the Hong Kong Hang Seng Index rose 1.2%. South Korea’s Kospi index rose 3.5% after its central bank kept interest rates at historic lows.

Write to Anna Hirtenstein by [email protected]