Stock Futures Drop Ahead of Powell’s Comments

The S&P 500 is on track for a third day of declines as investors await Fed chair’s comments on inflation prospects and rising bond yields

A trader worked on the floor of the New York Stock Exchange on Thursday .

U.S. stock futures edged lower Thursday as investors awaited comments from Federal Reserve Chairman Jerome Powell about the outlook for inflation and the central bank’s views on rising bond yields.

Futures tied to the S&P 500 ticked down 0.4%, suggesting that the benchmark may drop for a third consecutive day after the opening bell. Contracts linked to the Nasdaq-100 ticked down 0.6%, pointing to further losses for technology stocks. Dow Jones Industrial Average futures edged down 0.3%.

A recent selloff in government bonds has lifted Treasury yields, curbing investors’ appetite for the technology stocks that had soared in a low-yield environment. Some money managers are betting that additional fiscal stimulus in the U.S. will boost inflation and cause the Fed to raise interest rates sooner than they had expected. That has led to a jump in real yields, or the returns on bonds after adjusting for inflation expectations.

Investors say they are hoping Mr. Powell will answer questions on how he views the jump in yields when he speaks at The Wall Street Journal Jobs Summit at 12:05 p.m. ET. Central bank officials have previously said that they will keep monetary policy loose until the economy is stronger, and that they view the rise in bond yields as a signal that investors are optimistic about the U.S. economic recovery.

“Powell’s comments today are going to be really important,” said Hugh Gimber, a strategist at J.P. Morgan Asset Management. “Clearly, what we’re seeing over the last few weeks is equities being disrupted by the pace of the rise in real yields, and that puts the Fed in a tough space.”

7 views0 comments