S&P500 and Dow Jones Slip as Treasury Yields Surge, Corporate Earnings Disappoint

Stock Futures Dip as Treasury Yields Climb Higher

U.S. stock futures slipped on Wednesday, driven by rising Treasury yields and disappointing corporate earnings. This comes after the S&P 500 recorded its first consecutive losses since early September, as market concerns grew over tightening financial conditions.

At 13:04 GMT, Dow Futures are trading 42917.00, down 252.00 or -0.58%. S&P 500 Index Futures are at 5872.00, down 20.50 or -0.35% and Nasdaq Futures are trading 20452.50, down 89.50 or -0.44%.

Rising Treasury Yields Weigh on Equities

The continued rise in Treasury yields was a primary factor behind the decline in stock futures. The yield on the benchmark 10-year Treasury note climbed to 4.23%, reaching its highest level since July, with yields moving inversely to bond prices.

The 10-year yield, which jumped 12 basis points earlier this week, is driven by robust economic data and ongoing concerns about U.S. fiscal deficits. Meanwhile, the 2-year Treasury yield rose to 4.05%, reflecting short-term rate expectations. Investors worry that the Federal Reserve may slow or delay its expected rate cuts due to persistent inflationary pressures.

Earnings Disappointments Add to Market Pressure

Adding to market concerns were earnings-related declines in major stocks. McDonald’s tumbled over 6.5% after the Centers for Disease Control and Prevention (CDC) linked an E. coli outbreak to its Quarter Pounder burgers, resulting in 10 hospitalizations and one death. Starbucks also suffered, dropping 3.4% after releasing preliminary results showing a decline in sales, leading the company to suspend its 2025 forecast.

Additionally, Coca-Cola saw a 1.8% drop despite reporting better-than-expected Q3 earnings of $0.77 per share and $11.95 billion in revenue, as investors fretted over future currency headwinds. Boeing also posted a 0.6% loss following a Q3 report that included a larger-than-expected loss per share of $10.44 and negative free cash flow of $1.95 billion, exacerbated by challenges in its commercial airplanes and defense segments.

Fed Commentary and Economic Data in Focus

Investors remain cautious ahead of more Federal Reserve commentary this week, with Fed Governor Michelle Bowman and Richmond Fed President Thomas Barkin scheduled to speak on Wednesday. The release of the Fed’s Beige Book, a detailed report on economic conditions across the central bank’s 12 districts, is also expected to provide further insight into the Fed’s stance on interest rates. Recent statements from Fed officials have suggested that further rate cuts might not be imminent, raising uncertainty among market participants.

Cash Market Opening Outlook

Rising Treasury yields, coupled with underwhelming earnings reports, continue to exert downward pressure on equities. Traders should expect further volatility in the short term as bond market movements impact stock performance. While the broader market is facing headwinds, some analysts believe the recent consolidation could provide a base for improved performance as the year progresses.