Futures slide as 10-yr Treasury yield hits 5%; Big Tech earnings in focus
By Shubham Batra and Shashwat Chauhan
(Reuters) — Futures tracking Wall Street's main stock indexes slumped on Monday as yields on the benchmark U.S. 10-year Treasury note hit a crucially watched 5% mark, sparking a selloff in megacap stocks.
The yield on the note touched the July 2007 milestone that it briefly attempted to scale last week. It was last at 5.0144%.
«When investors can earn a 5% annual return on safe assets such as government bonds, they are less likely to take chances on riskier plays,» Marios Hadjikyriacos, senior investment analyst at forex broker XM, said in a note.
«Beyond providing an attractive alternative to equities, higher bond yields also make it more costly for businesses to take on debt, limiting the scope for expansion and ultimately earnings growth.»
Megacaps including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META) and Amazon.com (NASDAQ:AMZN) slid between 0.6% and 1.5% in premarket trading.
Focus will also remain on a busy week of earnings, with four of the 'Magnificent Seven' stocks reporting later this week whose gains have powered the S&P 500 higher in 2023 while the rest of the indexes lagged.
Chipmaker Intel (NASDAQ:INTC), oil major Exxon Mobil (NYSE:XOM), General Motors (NYSE:GM) are some of the other companies reporting quarterly results this week.
Of the 86 companies in the S&P 500 that have reported earnings so far in the third quarter, 78% have been above analyst estimates, according to the LSEG data. Overall, third-quarter earnings are likely to grow 1% year-on-year.
Meanwhile, Israel bombarded Gaza with air strikes overnight, with Prime Minister Benjamin Netanyahu convening a meeting of his top generals
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