By Anna Hirtenstein and Xie Yu
U.S. stock futures retreated Thursday, suggesting that the major
indexes will tumble for a fourth consecutive day.
Futures tied to the S&P 500 edged down 0.3%, and contracts
linked to the Dow Jones Industrial Average lost over 0.5%.
Nasdaq-100 futures retreated 0.2%, pointing to moderate losses for
technology stocks after the opening bell.
Stocks dropped Wednesday, leaving the S&P 500 and Dow
suffering their steepest three-day declines since late October.
Investors are jittery after consumer prices surged higher in
April, prompting concerns that the Federal Reserve may move on
interest rates or scale back bond purchases sooner than expected.
Fed officials have repeatedly said that they expect any jump in
inflation to be transitory, but some investors aren't convinced.
The threat of higher inflation is sapping money managers' appetite
for highflying technology shares and other growth stocks.
"The major issue we see is that valuations for many parts of the
market are rich," said Salman Baig, a multiasset investment manager
The prospect of accelerating consumer-price growth is making
investors question the valuations of stocks that have been prized
by investors because of their earnings potential. "When you have
rising inflation, those future cash flows start to need to be
adjusted," Mr. Baig said. "People are looking for a place to ride
out the storm," he added.
The jump in consumer prices has triggered debates about whether
"inflation is actually more of an issue than we were led to
believe, and whether the Federal Reserve is going to have to be a
little bit more aggressive," said Dwyfor Evans, head of macro
strategy for the Asia-Pacific region at State Street Global
The selloff in U.S. Treasurys continued for a fifth consecutive
day. The yield on the 10-year Treasury note rose to 1.702%, from
1.693% on Wednesday, its highest level in more than a month. Yields
rise when prices drop.
A Fed official on Wednesday said that the scale of the inflation
jump in April was surprising, but more data would be necessary for
the central bank to begin scaling back its easy-money policies.
The latest weekly jobless claims data, a proxy for layoffs, will
be released at 8:30 a.m. ET. Economists surveyed by The Wall Street
Journal are expecting 500,000 new applications for unemployment
benefits last week, up slightly from a pandemic low of 498,000 a
week earlier. Claims have come down from a recent January peak of
about 900,000, though they remain more than twice as high as levels
seen before the pandemic struck last spring.
Earnings season continues, with Airbnb, Walt Disney, Coinbase
and DoorDash expected to post results after markets close.
Bitcoin dropped over 8% to around $49,800, according to
CoinDesk, after Tesla Chief Executive Elon Musk said his company
had suspended accepting the cryptocurrency as payment for vehicles
due to its high carbon footprint. It earlier fell as low as
$46,294.72, its lowest price since March 1, according to
Commodity markets were broadly lower. Brent-crude futures, the
benchmark in international energy markets, fell 2.5% to $67.58 a
barrel, pulling back from a two-month high. Gasoline futures fell
2.4% to $2.11 a gallon. The owner of the Colonial Pipeline said
Wednesday that it has begun restarting operations following a
cyberattack that shut down the main fuel conduit serving the East
Overseas, the pan-continental Stoxx Europe 600 fell 1.2%.
Among European equities, Burberry fell nearly 8% after reporting
a decline in full-year revenue and a measure of profit. Retail
trading platform Hargreaves Lansdown slid more than 5% after it
said it has started to see a fall in share-dealing volumes as
lockdown measures eased.
Investors continued to sell European government bonds. The yield
on the benchmark 10-year German bund climbed to minus 0.099%, while
the equivalent U.K. gilt yield rose to 0.922%. Both were at the
highest levels since May 2019.
In Asia, most major equity benchmarks declined by the close of
trading. Hong Kong's Hang Seng Index lost 1.8%. Indexes in South
Korea, Japan, Australia and China also all retreated. Taiwan's
benchmark Taiex shed 1.5%, declining for a fourth straight day.
That put it in correction territory, meaning it has fallen at least
10% from a recent high.
In Tokyo, shares in SoftBank Group plunged by more than 7%, even
after the technology investor reported the highest-ever annual
profit for a Japanese company. In a note to clients, Jefferies
analyst Atul Goyal said the lack of a new buyback plan was
disappointing, after SoftBank concluded an earlier program totaling
Write to Xie Yu at firstname.lastname@example.org
(END) Dow Jones Newswires
May 13, 2021 07:24 ET (11:24 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.