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)
Copyright (c) 2018 Dow Jones & Company, Inc.