Wall St Futures Slip As Treasury Yields Hit Nine-Month High

Wall St futures fell on Thursday as a jump in U.S. bonds yields, spurred partly by Fitch’s downgrade of U.S. long-term credit rating, pressured rate-sensitive shares and set Wall Street up for another round of selloff.

Fitch’s action hit the appetite for risky assets on Wednesday, dragging Wall Street sharply lower as investors took the opportunity to book profits on five months of gains.

Megacap growth and technology stocks including Apple (AAPL.O), Alphabet (GOOGL.O) and Microsoft (MSFT.O) slipped between 0.2% and 0.4% in premarket trading, with the yield on the benchmark 10-year note hovering around its highest since November.

“US equities, especially cyclicals, look vulnerable to further downside after a strong run – either on disappointment in the data relative to lofty expectations or on renewed hawkishness from the Fed,” Karen Reichgott Fishman, senior strategist at Goldman Sachs, wrote in a note.

Traders will closely monitor initial jobless claims for the week ended July 29 to assess the labor market’s strength after a private payrolls report on Wednesday showed continued resilience. The report is due at 8:30 a.m. ET.

U.S. non-manufacturing Purchasing Managers’ Index (PMI), June factory orders and comments from Richmond Federal Reserve President Thomas Barkin are also on the radar.

At 07:00 a.m. ET, Dow e-minis were down 54 points, or 0.15%, S&P 500 e-minis were down 10 points, or 0.22%, and Nasdaq 100 e-minis were down 52.25 points, or 0.34%.

Earnings are also in focus as Apple and Amazon.com (AMZN.O) are due to report quarterly results after market close.

Of the two-thirds of the S&P 500 companies that have reported so far, 79.9% have topped earnings estimates, according to Refinitiv data on Wednesday.

Qualcomm (QCOM.O) tumbled 8.4% in trading before the bell as the San Diego, California-based company’s fourth-quarter sales forecast fell below market expectations.

The company said it would likely cut jobs as consumer spending on gadgets such as smartphones remained stubbornly weak amid slowing global economic growth.

Peers Nvidia (NVDA.O) and Intel (INTC.O) eased 0.5% each.

PayPal Holdings (PYPL.O) shed 7.8% as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement towards the end of the year.

DoorDash (DASH.N) rose 5.2% after the delivery firm raised its annual core profit forecast for a second time and posted an upbeat quarterly revenue as groceries and food orders jumped.

Meanwhile, Moderna(MRNA.O) gained 3.3% as the company raised its annual forecast for COVID-19 vaccine sales to up to $8 billion.