Futures extend slide as Treasury yields hit 9-month high

(Reuters) – U.S. stock index futures fell on Thursday as a jump in U.S. bonds yields, spurred partly by Fitch’s downgrade of U.S. long-term credit rating, pressured rate-sensitive stocks and set Wall Street up for another round of selloff.

Fitch’s move hit the appetite for risky assets on Wednesday, dragging Wall Street sharply lower as investors took profits on five months of gains.

Megacap stocks including Apple, Alphabet and Microsoft slipped between 0.3% and 0.5% in premarket trading, with the yield on the benchmark 10-year note hovering around its highest since November.

“US equities, especially cyclicals, look vulnerable to further downside after a strong run – either on disappointment in the data relative to lofty expectations or on renewed hawkishness from the Fed,” Karen Reichgott Fishman, senior strategist at Goldman Sachs, wrote in a note.

Traders will closely monitor initial jobless claims for the week ended July 29, due at 8:30 a.m. ET, to assess the strength of the labor market after a private payrolls report on Wednesday showed continued labor market resilience.

U.S. services Purchasing Managers’ Index (PMI) and comments from President of Richmond Federal Reserve Thomas Barkin later in the day are also on the radar.

At 05:21 a.m. ET, Dow e-minis were down 93 points, or 0.26%, S&P 500 e-minis were down 13.5 points, or 0.3%, and Nasdaq 100 e-minis were down 58.75 points, or 0.38%.

PayPal Holdings slid 7.9% in premarket trading as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement towards the end of the year.

Qualcomm slumped 8.6% as the San Diego, California-based company’s fourth-quarter sales forecast fell below market expectations.

The company said it would likely cut jobs as consumer spending on gadgets such as smartphones remained stubbornly weak amid slowing global economic growth.

Meanwhile, DoorDash rose 5.8% after the delivery firm raised its annual core profit forecast for a second time and posted an upbeat quarterly revenue as groceries and food orders jumped.

Tech and growth giants Apple and are due to report quarterly results after market close.

(Reporting by Shubham Batra in Bengaluru; Editing by Anil D’Silva)


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