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U.S. Stocks May See Initial Weakness Amid Rising Treasury Yields

wallstreet july23 24nov21 lt

After turning in mixed performances over the past several sessions, stocks are likely to move mostly lower in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 155 points.

A continued increase in U.S. Treasury yields may weigh on Wall Street amid concerns the Federal Reserve could accelerate plans to tighten monetary policy.

The yield on the benchmark ten-year note has climbed to its highest intraday level in a month, extending the upward move seen since President Joe Biden announced his intent to re-nominate Fed Chair Jerome Powell.

Yields saw further upside after the Labor Department released a report showing first-time claims for U.S. unemployment benefits slid to their lowest level in over fifty years in the week ended November 20th.

The Labor Department said initial jobless claims tumbled to 199,000, a decrease of 71,000 from the previous week's revised level of 270,000.

Economists had expected jobless claims to edge down to 260,000 from the 268,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969.

Meanwhile, the Commerce Department released a report showing another steep drop in orders for transportation equipment led to an unexpected decrease in new orders for U.S. manufactured durable goods in the month of October.

The report said durable goods orders fell by 0.5 percent in October following a 0.4 percent drop in September. The decrease surprised economists, who had expected durable goods orders to rise by 0.2 percent.

Excluding the continued decline in orders for transportation equipment, durable goods orders rose by 0.5 percent in October after climbing by 0.7 percent in September. The increase matched economist estimates.

A separate report from the Commerce Department showed the U.S. economy grew by slightly more than previously estimated in the third quarter.

The Commerce Department said real gross domestic product advanced by 2.1 percent in the third quarter compared to the previously reported 2.0 percent increase. Economists had expected the pace of GDP growth to be upwardly revised to 2.2 percent.

Another batch of U.S. economic data is scheduled to be released shortly after the start of trading, including reports on new home sales and personal income and spending.

Later in the day, the minutes of the latest Federal Reserve meeting may shed additional light on the outlook for monetary policy.

The major U.S. stock indexes once again moved in opposite directions during trading on Tuesday, closing mixed for the fourth consecutive session. While the Nasdaq extended the sharp pullback seen in the previous session, the Dow and the S&P 500 moved to the upside.

The Nasdaq climbed well off its worst levels of the day but still closed down 79.62 points or 0.5 percent at 15,775.14. Meanwhile, the Dow climbed 194.55 points or 0.6 percent to 35,813.80 and the S&P 500 rose 7.76 points or 0.2 percent at 4,690.70.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while China's Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, European stocks are seeing further downside on the day. The French CAC 40 Index and the German DAX Index are both down by 0.7 percent, although the U.K.'s FTSE 100 Index is once again bucking the downtrend and edging up by 0.1 percent.

In commodities trading, crude oil futures are slipping $0.20 to $78.30 a barrel after jumping $1.75 to $78.50 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,784.80, up $1 compared to the previous session's close of $1,783.80. On Tuesday, gold tumbled $22.50.

On the currency front, the U.S. dollar is trading at 115.15 yen compared to the 115.14 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1210 compared to yesterday's $1.1248.

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