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Stocks May Open Lower Amid Rising Treasury Yields - U.S. Commentary


Following the volatility seen in the previous session, stocks are likely to move to the downside in early trading on Tuesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 122 points.

A continued increase in U.S. treasury yields is likely to weigh on the markets as the bond markets reopen following the Columbus Day holiday on Monday.

Upbeat economic data has pushed treasury yields higher in recent sessions, leading to concerns the Federal Reserve may raise interest rates more aggressively than previously anticipated.

The ten-year yield has reached its highest levels in well over seven years, while the thirty-year bond yield has climbed to its highest level since 2014.

News the International Monetary Fund has lowered its forecast for U.S. and Chinese economic growth may also generate some selling pressure on Wall Street.

Citing the "negative effect of recent tariff actions," the IMF said economic growth in the U.S. and China is now expected to slow to 2.5 percent and 6.2 percent, respectively, next year.

Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.

In the coming days, traders are likely to keep a close eye on reports on producer and consumer prices as well as comments by several Federal Reserve officials.

Stocks saw considerable volatility during trading on Monday, as many traders remained away from their desks amid the Columbus Day holiday. The major averages showed wild swings over the course of the trading session.

Eventually, the major averages ended the day mixed. While the Dow rose 39.73 points or 0.2 percent to 26,486.78, the Nasdaq slid 52.50 points or 0.7 percent to 7,735.95 and the S&P 500 edged down 1.14 points or less than a tenth of a percent to 2,884.43.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while Hong Kong's Hang Seng Index dipped by 0.1 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index has fallen by 0.6 percent, the U.K.'s FTSE 100 Index is down by 0.5 percent and the French CAC 40 Index is down by 0.5 percent.

In commodities trading, crude oil futures are climbing $0.39 to $74.68 barrel after slipping $0.05 to $74.29 a barrel on Monday. Meanwhile, after tumbling $17 to $1,188.60 an ounce in the previous session, gold futures are inching up $0.30 to $1,188.90 an ounce.

On the currency front, the U.S. dollar is trading at 113.29 yen compared to the 113.23 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1450 compared to yesterday's $1.1492.

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