U.S. stocks on Thursday looked poised to drop for a second straight session, as investors appeared to continue to react negatively to Federal Reserve minutes that might have been interpreted as slightly more hawkish by investors.
How are benchmarks performing
Futures for the Dow Jones Industrial Average YMZ8, -0.42% fell 112 points, or 0.4%, to 25,622, those for the S&P 500 index ESZ8, -0.46% declined by 13.70 points to 2,802.25, a fall of 0.5%. Meanwhile, Nasdaq-100 futures traded 46.25 points, or 0.6%, lower at 7,267.75.
On Wednesday, the Dow DJIA, -0.36% finished the day down 91.74 points, or 0.4%, at 2706.88. The S&P 500 SPX, -0.03% lost 0.71 point, or less than 0.1%, falling to 2,809.21, while the Nasdaq Composite Index COMP, -0.04% shed 2.79 points to close at 7,642.70.
The three main benchmarks haven’t posted consecutive losses since Oct. 11, according to FactSet data.
What’s driving markets?
Chinese stock markets touched a fresh four-year low and a seemingly hawkish Fed has combined to undercut investor sentiment on Thursday.
The minutes of the Fed’s September meeting, released on Wednesday, indicated that policy makers are forging ahead with increases and could hike rates again as early as December, as expected. Tightening policy comes as no surprise but it does elevate concerns about increasing borrowing costs and the impact that that could have on equity prices, market participants say.
Last week’s downdraft in stocks has been attributed partly to a jump in yields of U.S. government bonds, which can also undercut appetite for stocks compared against so-called risk-free Treasurys. Rates hikes are expected to drive yields higher still.
Concerns about the vitality of Asian markets, in particular China’s, may also be weighing on the investment mood. Shanghai’s composite index SHCOMP, -2.94% fell 2.9% and the Shenzhen A-Share 399106, -2.73% dropped 2.7%. Weakness in Beijing’s markets came after China’s currency, the yuan, briefly touched its weakest level since January of 2017. One buck last fetched 6.9379 yuan USDCNY, +0.1747% up 0.2%. Those currency moves came after Treasury refrained from labeling China a currency manipulator in its biannual report on currency practices released late Wednesday.
The U.S. and China have been locked in a trade spat that doesn’t show signs of easing and that threatens to produce intermittent headwinds for markets.
Which stocks are in focus?
Alcoa Corp. shares AA, +1.41% were rising in premarket on better-than-expected earnings, and the company said it sees an aluminum deficit for this year.
Endocyte Inc. shares ECYT, -2.45% soared after Novartis AG NVS, -0.51% NOVN, +1.76% said it would buy the cancer-drug maker for $2.1 billion.
Earnings for Thursday include Danaher Corp. DHR, -0.09% Philip Morris International PM, +1.27% and Travelers Cos. Inc. TRV, +1.35% with American Express Co. AXP, +0.07% and PayPal Holdings Inc. PYPL, -0.65% were due after the close.
Which data are in focus?
Weekly jobless claims and Philly Fed manufacturing index for October are due at 8:30 a.m. Eastern Time, while a report on leading economic indicators are set to be released at 10 a.m.
What are strategists saying?
“U.S. Treasury yond yields pushed higher after the FOMC news with 10-year yields back above 3.2% early today. If interest rates continue to move higher from their current levels, investors will become even more reluctant to buy the dips in stocks,” wrote Hussein Sayed, chief market strategist at FXTM in a Thursday research note.
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