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Stock index futures traded in the red on Wednesday, and yields were mixed, a day after Nasdaq hit a new record close, while two weak Treasury note auctions sparked a bond selloff.
S&P 500 futures (SPX) -0.5%, Nasdaq 100 futures (US100:IND) -0.6% and Dow futures (INDU) -0.6%.
The 10-year Treasury yield (US10Y) rose 3 basis points to 4.57%. The 2-year yield (US2Y) was down 2 basis points to 4.97%. See how Treasury yields have done across the curve at the Seeking Alpha bond page.
U.S. stocks on Tuesday ended mixed, with equities coming under pressure amid the bond sell-off. The markets were also not helped by hawkish comments from Minneapolis Federal Reserve President Neel Kashkari, who countered favorable economic data.
Growth stocks outperformed as buying in Nvidia (NVDA) continued. The chip company is now $100B away from Apple’s (AAPL) market cap.
“Markets struggled to gain much traction yesterday, with sovereign bonds selling off globally thanks to several hawkish headlines and weak demand at a Treasury auction. The initial catalyst for the selloff was the U.S. Conference Board’s consumer confidence indicator, which unexpectedly rose to 102.0 in May,” Deutsche Bank’s Henry Allen said.
Consumer confidence perked up in May, and came at 102.0, compared with 95.3 expected and 97.5 in April (revised from 97.0).
“The rebound in consumers’ confidence likely will prove unsustainable if job growth weakens as we expect,” Pantheon Macroeconomics said.
“But even though there was relief that consumer confidence had stopped falling, it also led investors to dial back their expectations for future rate cuts, with Treasury yields rising after the release,” Allen added.
On the economic front, the MBA Mortgage Applications data is slated to land before the bell, while the May Richmond Manufacturing Index is expected to come during market hours. Economists forecast a fall to -6.
The Survey of Business Uncertainty will be released at 11:00 am ET.
The results of $28B, 2-year FRN Auction, and $44B, 7-year Note Auction are also due later in the day.
The Beige Book is expected to come at 2:00 pm ET.
