Stocks Futures Waver After Record Dow

Dow Jones industrial average contracts fluctuated between gains and losses, suggesting that the blue-chips index could be deactivated after a historic close on Wednesday.

New data on Thursday showed that weekly unemployment claims fell to 730,000 for the week ended February 20, a drop from the previous week and less than economists expected. The US economy grew in the fourth quarter at an annualized rate of 4.1%. New durable goods rose 3.4% in January for the ninth consecutive month, while production continued to return.

Investors’ appetite for risky assets returned on Wednesday to Federal Reserve Chairman Jerome Powell’s comments that the central bank will keep interest rates low for a while.

However, the recent sharp rise in bond yields – which closed on Wednesday at its highest level in a year – has made some money managers more cautious. These investors weigh the transfer of funds into less risky assets, such as bonds, and into stocks with lower valuations than technology companies.

“The market is nervous. Increasing bond yields drive stocks, especially growth stocks, ”said Sebastien Galy, macro strategist at Nordea Asset Management. “In general, there is a reduction in risk,” he added.

Optimism about the economic recovery is prompting investors to transfer funds to shares that could benefit from a return this year. It weighs on the technological actions that fueled much of last year’s rally.

“Rising bond yields are triggering this rotation, away from rising stocks and more in favor of equity stocks,” said Sophie Chardon, cross-asset strategist at Lombard Odier. “Increasing yields support banks, higher oil prices support energy. It’s a change of leadership. ”

The yield on the 10-year Treasury benchmark rose to 1.460% from 1.388% on Wednesday. The yield on government bonds increased as investors reduced their holdings of the safest assets.

Investors are also watching closely for signs of rising inflation following high doses of monetary and fiscal incentives. At the same time, markets have also become cautious, as recent economic data have shown that the recovery is likely to be slow and halted.

Earnings season ends: Airbnb,

Beyond meat,

DoorDash and Salesforce.com are scheduled to launch their results on Thursday.

Popular shares with Reddit users on the WallStreetBets forum rose on Wednesday in the last hour of trading, in a volatility reminiscent of the activity seen last month. In premarket trading, GameStop was up 55% and AMC Entertainment was up 11%.

The moves show that “there is still liquidity and a lot of access to speculative bets,” said Ms Chardon. “We need to be prepared to live with this kind of targeted bubble, but I wouldn’t see it as a threat to the global stock market.”

Prior to the market opening, Moderna gained over 3% after announcing a plan to increase its production capacity of Covid-19 vaccines. Best Buy fell 5.4% after saying it anticipates a slowdown in sales growth in 2021.

Oil prices continued to rise, with Brent crude rising for the fourth day. The international oil indicator added 0.5% to $ 66.51 a barrel, close to its highest level since January 2020.

Abroad, the pan-continental Stoxx Europe 600 fell 0.1%.

Among individual shares, brewer Anheuser-Busch InBev fell by almost 5% after its fourth-quarter profit fell below expectations. British packaging company DS Smith has skipped more than 6% of reports that rival Mondi is exploring a takeover.

Investors have also been selling European government bonds in recent weeks as they look for higher returns. The yield on 10-year French bonds, which is reversing from the price, rose above zero for the first time since June and reached 0.024%.

In Asia, most major benchmarks ended the day. The Shanghai Composite Index added 0.6%, and the Hong Kong Hang Seng Index rose 1.2%. The Kospi index in South Korea rose 3.5% after its central bank kept interest rates at historic lows.

Write to Anna Hirtenstein at [email protected]