Traders on the floor of the New York Stock Exchange on October 12, 2023.
Source: NYSE
Stock futures fell Friday morning as traders focused on a recent rise in the 10-year Treasury yield.
Futures tied to the Dow Jones Industrial Average fell 27 points, or 0.1%. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell about 0.2%.
The yield on the benchmark 10-year government bond exceeded 5 percent for the first time in 16 years. The 10-year yield reached 5.001% around 5 p.m. ET on Thursday, the first time it traded above that level since July 20, 2007 – when it yielded as much as 5.029%. The last price was 4.939%.
Shares of SolarEdge plunged 24% after the company cut its third-quarter revenue forecast. Knight-Swift Transportation rose 16% after the company beat estimates on both revenue and profit in the third quarter.
The action follows a volatile day for stocks. The 30-stock Dow lost 250.91 points, or 0.75%, while the S&P 500 lost 0.85%. The Nasdaq Composite slipped nearly 1%.
Stocks were thrown into turmoil on Thursday after Federal Reserve Chairman Jerome Powell spoke in New York. He said inflation remained too high and slower economic growth would likely be needed to bring it down. Powell also said he doesn’t think interest rates are too high right now.
“Although the road will be bumpy and take some time, my colleagues and I are united in our goal of sustainably reducing inflation to 2 percent,” he added.
Even though Powell did not commit to further interest rate developments in his speech, the market seems to assume that the central bank will forego a rate hike in November.
According to the CME FedWatch Tool, Fed Funds futures pricing reflects a 92 percent probability that the central bank will leave interest rates unchanged through the conclusion of its November meeting.
The major averages are on track for losses this week. The S&P 500 lost 1.2% through Thursday’s close, while the Nasdaq lost 1.7%. The Dow fell nearly 0.8%.
On the earnings side, investors will pay attention to results from Comerica, Regions Financial and American Express. Oilfield services company SLB is also on deck to report.