By Peter Nurse
Investing.com - U.S. stocks are seen weakening at the open Thursday, continuing the previous session’s sell-off ahead of a key speech from Federal Reserve Chairman Jerome Powell.
At 7:05 AM ET (1205 GMT), the Dow Futures contract was down 60 points, or 0.2%, S&P 500 Futures traded 12 points, or 0.3%, lower, and Nasdaq 100 Futures dropped 50 points, or 0.4%.
Wall Street closed in the red on Wednesday, with the tech-heavy Nasdaq Composite index dropping 2.7%, the S&P 500 lost 1.3%, while the Dow Jones Industrial Average outperformed, losing just 0.4%.
The prime driver for this weakness was a surge in bond yields, as the benchmark 10-year U.S. Treasury yield rose to 1.49%, before stabilizing around 1.47%. This is not quite at the one-year high of 1.61% set last week, but still increases worries over potentially stretched equity valuations as these have been supported by expectations of a prolonged period of low interest rates.
With this in mind, Powell’s speech at a conference, at 12:05 PM ET (1705 GMT), will be studied carefully to see if he continues to downplay the rise in yields.
“This will be the last chance to hear from the Fed before it enters the two-week blackout period this weekend ahead of the March 17th FOMC meeting. The tone of this Q&A could well set the risk tone for the next two weeks,” analysts at ING said, in a research note.
Adding to the uncertainty has been data pointing to a slow and uneven economic recovery, particularly in the labor market. Wednesday saw the release of an unexpectedly weak private payrolls report, bringing the weekly jobless claims figure into focus later Thursday, ahead of Friday’s closely watched official employment report.
On the earnings front, BJs Wholesale (NYSE:BJ) and Kroger (NYSE:KR) are among the names reporting before the open, while Broadcom (NASDAQ:AVGO), Costco (NASDAQ:COST) and Gap (NYSE:GPS) are due after the closing bell.
Oil prices were largely unchanged Thursday, with traders waiting for news from a meeting of top producers over output levels going forward, particularly given Saudi Arabia’s surprise announcement in January of a unilateral cut of an additional one million barrels per day.
The pre-meeting of OPEC’s market monitoring committee ended without a formal recommendation to the ministers who will start thrashing out a deal at 8 AM ET (1300 GMT).
This important meeting has meant market participants looked through Wednesday’s surge in U.S. crude stockpiles, seen as a result of the recent spell of wintry weather in the southern states.
U.S. crude futures traded 0.2% higher at $61.38 a barrel, while the international benchmark Brent contract rose 0.1% to $64.12.
Elsewhere, gold futures fell 0.1% to $1,714.95/oz, while EUR/USD traded 0.2% lower at 1.2035.