US stock futures dropped on Thursday, extending losses for a third consecutive day. S&P 500 futures fell 0.6%, Nasdaq 100 contracts slid 1%, and Dow Jones Industrial Average futures dropped 0.3%. This decline comes as Treasury yields continued their ascent, with the 10-year Treasury yield reaching around 5.13% and 30-year yields hitting a 2004 high.
The market downturn was largely driven by rising oil prices and strong US growth data, which fueled concerns that interest rates would remain higher for longer. Brent crude rose above $105 a barrel, while benchmark US crude increased to $93.17 a barrel, and the cost of regular gasoline in the US averaged $4.48. The Federal Reserve's recent rate hike and hints from officials like John Williams and Michael Barr about potential further increases this year are also weighing on investor sentiment.
The selloff in bonds spread globally, with yields in Japan, Australia, and New Zealand climbing more than 10 basis points. The Stoxx Europe 600 fell 0.3%, and the MSCI Asia Pacific Index and MSCI Emerging Markets Index both declined by 0.9%. This environment has led to a re-evaluation of equities, particularly in the high-flying tech sector, as elevated bond yields erode their relative appeal and pressure valuations. Companies like Marvell Technology and Intel saw their shares fall about 3%.
Analysts noted that rising yields could cap valuation expansion and make earnings growth increasingly important. The ongoing Middle East conflict and uncertainties surrounding US-Iran talks are key drivers of oil prices, adding to market volatility. Investors are seeking clarity on whether yields are rising due to strong growth or demands for compensation against inflation and fiscal risks.
