Futures inch lower as Treasury yields surge, earnings in focus

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1970-01-01 08:00

U.S. futures fell on Friday as the yield on 10-year government bonds surged following the hawkish tone by

U.S. futures fell on Friday as the yield on 10-year government bonds surged following the hawkish tone by Federal Reserve Chair Jerome Powell, while investors awaited earnings reports from companies.

Powell said on Thursday U.S. economy's strength and continued tight labor markets could require still tougher borrowing conditions to control inflation.

That lifted the yield on the 10-year U.S. Treasury note, considered a safe-haven, to 5% for the first since 2007, while worries of another rate hike in 2023 gripped the equities market.

Tech-heavy Nasdaq closed 1% lower, while Wall Street's main indexes were set for their first weekly declines in three.

"Anyone expecting to hear Fed chairman Jay Powell adopt a less hawkish tone given the recent rise in yields was in for a disappointment...," said Michael Hewson, chief market analyst at CMC Markets UK.

Dallas Fed President Lorie Logan said that recent data and higher bond market borrowing costs give the central bank more space to deliberate on its next monetary policy move.

Investors will now shift their focus to companies reporting quarterly results, including American Express, Comerica and Schlumberger, among others.

Comments from Philadelphia Fed President Patrick Harker and Cleveland Fed President Loretta Mester will also be on investor radar during the day.

Despite the nervousness regarding rate hikes, traders see a 98% chance for November and 75% for December that the Fed will keep the benchmark rate unchanged, according to CME's FedWatch Tool.

Markets will also monitor developments in the Middle East conflict and chances of an escalation in the region.

U.S. President Joe Biden on Thursday asked Americans to spend billions more dollars to help Israel fight Hamas amid rising expectations that Israeli forces will mount a ground invasion of Gaza imminently.

At 4:57 a.m. ET, Dow e-minis were down 19 points, or 0.06%, S&P 500 e-minis were down 2.5 points, or 0.06%, and Nasdaq 100 e-minis were down 22.75 points or 0.15%.

SolarEdge slumped 22% in premarket trading after it warned of significantly lower revenue in the fourth quarter.

Shares of other solar firms Enphase Energy and JinkoSolar Holding were also down 13.3% and 5.4%, respectively.

(Reporting by Shubham Batra in Bengaluru; Editing by Arun Koyyur)