By William Watts, MarketWatch , Ryan Vlastelica
S&P 500 on track for sixth straight daily decline
U.S.-stock index futures tumbled on Thursday, indicating Wall Street will extend a multiday decline and extend losses after the worst session for the major averages in months as investors continued to fret over rising bond yields and the prospect of higher interest rates and the impact that both factors could have on equity prices.
Shares fell globally, with steep losses in both Asia and Europe (http://www.marketwatch.com/story/global-markets-tumble-us-stock-futures-point-to-continued-selloff-on-wall-street-2018-10-11). Tech stocks were lower in premarket trading, while energy shares could also come under pressure as oil prices sink.
What are major benchmarks doing?
Futures for the Dow Jones Industrial Average were down 126 points, or 0.5%, to 25,394, with all 30 of the blue-chip average's components in negative premarket territory (http://www.marketwatch.com/story/all-30-dow-stocks-fall-ahead-of-the-open-2018-10-11).
S&P 500 futures dropped 10 points, or 0.4%, to 2,771. Nasdaq-100 futures dropped 31 points to 7,001, a decline of 0.4%.
See:Why the stock market tumbled Wednesday, ushering in its worst start to a quarter in about 2 years (http://www.marketwatch.com/story/why-the-stock-market-tumbled-wednesday-ushering-in-its-worst-start-to-a-quarter-in-about-2-years-2018-10-10)
In a shocking day for investors Wednesday, the Dow Jones Industrial Average skidded 831.83 points, or 3.2%, its worst one-day drop since February. The S&P 500 index lost 94.66 points, or 3.3%. The benchmark index has dropped for five straight sessions, its longest losing streak since a nine-day decline that ended in November 2016. The Nasdaq Composite Index fell 315.97 points, or 4.1%, to 7,422.05, its biggest decline since June 2016.
Losses were broad based, but the technology sector slid 4.8%, its steepest one-day percentage drop since August 2011.
Also read:These stocks in the Dow Jones Industrial Average, S&P 500 and Nasdaq declined the most (http://www.marketwatch.com/story/these-stocks-in-the-dow-jones-industrial-average-sp-500-and-nasdaq-declined-the-most-today-2018-10-10)
The decline took the major indexes below key levels, which could be a catalyst for additional selling ahead. Both the Dow and the S&P closed below their 50-day moving averages, a closely watched metric for short-term momentum trends. This was the first time both have ended below this level since July.
Meanwhile, both the Nasdaq and the Russell 2000 ended below their 200-day moving averages on Thursday. This was the first time the Russell has done so since August 2017, and the first time the Nasdaq has ended below this crucial level for long-term momentum since June 2016.
At current levels, the Dow is 5% below its intraday record and it remains up 3.6% for 2018. The S&P is up 4.2% year to date, and is 5.3% under its record. The Nasdaq has gained 7.5% in 2018, but it is 8.7% under record levels.
What's driving the market?
Investors have pinned the selloff on a variety of factors, including a sudden rise in long-dated interest rates since late September. A bond-market selloff saw the yield on the 10-year U.S. Treasury top 3.26% early Tuesday for the first time since April 2011.
Higher yields raise borrowing costs for corporations. Higher yields can also offer competition to equities, luring investors away from stocks. Market turmoil, however, appeared to spark haven demand for U.S. paper, with the yield on the 10-year note down more than 6 basis points Thursday to 3.158%.
President Donald Trump stepped up his criticism of the Fed late Wednesday (http://www.marketwatch.com/story/trump-says-the-fed-has-gone-crazy-after-the-dow-tumbles-830-points-in-one-day-2018-10-10), blaming the central bank's rate-hiking efforts for the stock-market weakness. Some analysts argue the Fed's expected rate path is overly aggressive, while others contend strong underlying economic fundamentals justify the central bank's outlook.
Check out:What Trump's tirade against 'loco' Fed means for the markets (http://www.marketwatch.com/story/what-trumps-tirade-against-loco-fed-means-for-the-markets-2018-10-11)
Continuing trade tensions with China and concerns about global growth have also been cited as factors behind the equity market's downturn.
Read:Tech stocks plunge because investors are nervous--here are 3 reasons why (http://www.marketwatch.com/story/tech-stocks-plunge-because-investors-are-nervous-here-are-3-reasons-why-2018-10-10)
In the latest economic data, jobless claims rose by 7,000 in the latest week, although they remain near multidecade lows. Separately, the consumer-price index rose 0.1% in September. Core CPI, which excludes food and energy, rose by the same amount.
What are analysts saying
The market losses are "a reaction from investors finally realizing we are in a higher interest rate environment, and given the elevated level of stocks, market participants were likely looking for a reason to sell," said Charlie Ripley, senior investment strategist for Allianz Investment Management. "Higher interest rates typically bring on tighter financial conditions which could dampen growth going forward and equity markets are reacting to that."
He added, "we are witnessing the repercussions in the markets as the Fed takes the punch bowl away from the party."
Read:As stocks slide, investors see turn to a 'defensive market' (http://www.marketwatch.com/story/as-stocks-slide-investors-see-turn-to-a-defensive-market-2018-10-05)
Also:As stocks sell off, analysts debate whether the recent record was a market top (http://www.marketwatch.com/story/as-stocks-sell-off-analysts-debate-whether-the-recent-record-was-a-market-top-2018-10-09)
What stocks are in focus?
Investors will be watching formerly highflying tech stocks for further signs of weakness. Shares of Amazon.com Inc. (AMZN), Google parent Alphabet Inc. (GOOGL) (GOOGL), and Twitter Inc. (TWTR) were among stocks hammered Wednesday, a selloff that also coincided with a warning from Barclays (http://www.marketwatch.com/story/amazon-alphabet-twitter-tumble-as-barclays-warns-of-choppy-earnings-season-ahead-2018-10-10) that a choppy earnings season lies ahead for internet companies.
Shares of Walgreens Boost Alliance Inc. (WBA) shed 2.4% in premarket trading after the drugstore chain reported quarterly sales that were below analyst forecasts (http://www.marketwatch.com/story/walgreens-stock-slumps-after-profit-beats-expectations-but-sales-came-up-short-2018-10-11).
Delta Air Lines Inc. (DAL) rose 1% in premarket trading after the company reported third-quarter results that beat expectations (http://www.marketwatch.com/story/delta-airs-stock-climbs-after-profit-rises-beats-expectations-2018-10-11).
Shares of L Brands Inc.(LB) gained 6% in premarket trading after the Victoria's Secret parent reported September sales that rose from a year ago (http://www.marketwatch.com/story/l-brands-pursues-all-alternatives-for-la-senza-and-reports-monthly-sales-stock-surges-2018-10-11) and said it was pursuing "all alternatives" for its La Senza business.
See:These stocks in the Dow Jones Industrial Average, S&P 500 and Nasdaq declined the most Wednesday (http://www.marketwatch.com/story/these-stocks-in-the-dow-jones-industrial-average-sp-500-and-nasdaq-declined-the-most-today-2018-10-10)
Compugen Ltd. (CGEN) jumped 17% before the bell after Bristol-Myers Squibb Co.(BMY) said it would make a $12 million equity investment in the company (http://www.marketwatch.com/story/compugens-stock-shoots-up-after-bristol-myers-to-pay-52-premium-for-equity-stake-2018-10-11), as part of a collaboration on a cancer treatment.
Shares of electric auto maker Tesla Inc. (TSLA) may be in focus after Chief Executive Elon Musk denied a report late Wednesday (http://www.marketwatch.com/story/elon-musk-denies-james-murdoch-is-favorite-to-become-tesla-chairman-2018-10-10) that James Murdoch is the "favorite" candidate to replace him as chairman of the company.
(END) Dow Jones Newswires
October 11, 2018 08:40 ET (12:40 GMT)
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