Bond Yields Edge Down, Stock Futures Waver Amid Earnings

Treasury yields crept down from multiyear highs, while stock futures wobbled amid earnings from major companies including Hasbro and Tyson Foods.

Futures tied to the S&P 500 ticked up 0.1% Monday after falling earlier, pointing to a potentially choppy day for the broad-market index after it closed up 1.6% last week. Futures for the tech-heavy Nasdaq-100 added 0.2% and Dow Jones Industrial Average futures were flat.

Stocks have had a volatile start to the year, amplified in recent days by extreme moves in big tech stocks. Last week saw a record-breaking decline in Meta Platforms shares and the biggest rise since 2015 for Amazon.com shares, after the companies posted earnings. Friday’s better-than-expected jobs report also turned traders’ attention back to central-bank policy, which is set to tighten as the economy continues to recover.

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Peloton jumped over 32% in premarket trading Monday after The Wall Street Journal reported that the stationary-bike company was drawing interest from Amazon and other potential suitors. Spirit Airlines rose 13% premarket after it said it was merging with Frontier Group in a $6.6 billion deal.

Tyson Foods climbed 5.7% premarket after it said it expected its full-year sales to be at the upper end of its guidance. Hasbro rose 2.2% after reporting revenue and profit that beat Wall Street’s estimates.

The yield on the benchmark 10-year Treasury note edged down to 1.923% Monday from 1.930% Friday. Shorter-dated bond yields also eased, with the two-year yield declining to 1.304% after closing at a nearly two-year high Friday.

“Markets have been repricing, as seen in the move up in yields, but I think we’re arriving at a point where it’s difficult to price in a much more hawkish outlook than we have today. We could now see a bit of stabilization,” said Esty Dwek, chief investment officer at FlowBank.

Yields remain at elevated levels, which is likely to make investors nervous, said Gregory Perdon, chief investment officer at Arbuthnot Latham.

Growth stocks in particular can get hit from higher yields as their present value is largely determined by growth expectations, which shrinks when calculated with a higher interest rate.

Companies scheduled to post earnings this week include Pfizer and KKR on Tuesday and Uber Technologies and Walt Disney on Wednesday. Coca Cola,

PepsiCo and Twitter are slated for Thursday.

“Earnings have been very good, broadly speaking. We’re seeing that the consumer remains quite strong and the reopening companies are doing better than the stay-at-home ones,” Ms. Dwek said. “Investors are trying to look past the pandemic.”

Stocks have had a volatile start to the year, amplified in recent days by big moves in major tech stocks.


Photo:

David L. Nemec/Associated Press

Cryptocurrencies gained Monday, with bitcoin rising 5% from its level at 5 pm ET on Friday. It traded at around $42,700. The digital currency rose above $40,000 Friday after spending two weeks below that level and maintained it through the weekend and into Monday. Shares of cryptocurrency platform Coinbase rose 2.4% premarket.

Overseas, the pan-continental Stoxx Europe 600 was flat. European government bond yields extended last week’s rises as markets continued to price in hawkish signals from the European Central Bank’s press conference on Thursday. Benchmark 10-year Italian and Greek bond yields rose to the highest levels since spring 2020.

In Asia, major benchmarks were mixed. The Shanghai Composite Index climbed 2% on reopening after China’s New Year holiday week, despite a private gauge of China’s services sector slipping to a five-month low. The advances in Chinese onshore stocks were a catch-up trade, following last week’s rally in US stocks, said Patrick Ru, a portfolio manager on Neuberger Berman Group’s global equity team.

Hong Kong’s Hang Seng Index closed flat and Japan’s Nikkei 225 declined 0.7%.

Write to Dave Sebastian at dave.sebastian@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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