Wednesday March 3rd


Stock futures give up gains as yields are on the move higher again

U.S. stock index futures gave up earlier gains as yields increased once again. Dow Jones Industrial average futures were up slightly. S&P 500 futures were flat. Nasdaq-100 futures were down by 0.1%. Futures rolled over as the 10-year yield extended its gains. The 10-year Treasury yield gained more than 4 basis points to 1.462%. (One basis point is 0.01%) The yield surged to a high of 1.6% last week, raising concern among investors about higher borrowing costs and inflation. President Joe Biden said late Tuesday that the U.S. will have a large enough supply of coronavirus vaccines to vaccinate every adult in the nation by the end of May. That would be two months ahead of schedule. The vaccine rollout is seen as key part in getting Americans back to work and for the economy to recover. On Tuesday, the major averages gave back some their sharp gains from Monday. The Dow Jones Industrial Average lost 143 points, pressured by a 2.6% drop in Intel. The S&P 500 registered a loss of about 0.8%. The Nasdaq Composite was the relative underperformer, dipping about 1.7% as Facebook, Microsoft, Amazon, Apple, Netflix and Google-parent Alphabet closed lower. The small-cap benchmark Russell 2000 dropped 1.93%. “On a day with little major news and ahead of important news soon to come — Fed meeting and the jobs numbers— investors took the opportunity to take some profits from yesterday’s big recovery,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. Tuesday’s “worst performer, technology, was yesterday’s biggest winner.” “Overall, buy on the dip is alive and well,” added Paulsen. “Despite a turbulent couple days, the S&P 500 has risen 1.55% so far this week dominated by reopening plays including materials, industrials, financials, and energy with technology being a market performer.” Private companies added 117,000 new jobs in February, according to a report Wednesday from payroll processing firm ADP. Economists polled by Dow Jones expect 225,000 private jobs were added last month. Stocks in Asia-Pacific were higher on Wednesday, as a private survey showed slowing growth in China’s services sector activity last month. Hong Kong’s Hang Seng index led gains among the region’s major markets, jumping 2.7% to close at 29,880.42. Mainland Chinese stocks also rose on the day as the Shanghai composite gained 1.95% to 3,576.90 while the Shenzhen component advanced 1.229% to about 14,932.39. In Japan, the Nikkei 225 closed 0.51% higher at 29,559.10 while the Topix index also gained 0.51% to finish its trading day at 1,904.54. South Korea’s Kospi climbed 1.29% to close at 3,082.99. Oil prices rose on Wednesday, boosted by expectations that OPEC+ producers might decide against increasing output when they meet this week, while signs of progress in the coronavirus vaccine rollout in the United States gave further support. Brent oil was up $1.28, or 2%, to $63.98 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.17, or 2%, to $60.92 a barrel. Gold prices fell on Wednesday as U.S. Treasury yields resumed their advance and global equities also firmed, reducing the appeal of safe-haven bullion. Spot gold fell 0.8% to $1,725.00 per ounce, having dropped to its lowest since June 15 at $1,706.70 on Tuesday. U.S. gold futures were down 0.6% to $1,724.00. The main driver for gold remains U.S. 10 year Treasury yields, said analyst Xiao Fu at Bank of China International. “It seems like the broad equity market is stable, with a moderate risk-on sentiment, so that (also) diminishes safe-haven demand for gold,” she added.