Stock futures fall after S&P 500 hits new low for the year; 10-year Treasury yields are briefly above 4%

European markets fell as global stocks retreated

European stocks Global markets retreated on Wednesday as economic concerns surrounding inflation and the growth outlook eased.

Pan-European Stoxx 600 Down 1% in early trade, banks posted a 2.4% loss, while only health care added 0.8% to positive territory.

The negative trade in Europe comes after a rough night Asia-Pacific markets.

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The US 10-year Treasury yield exceeds 4% for the first time since 2010

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Neil Veitch, investment director at Edinburgh-based SVM Asset Management, says he expects the macro landscape to remain “very difficult” for the rest of the year.

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Earnings questions, potential recession means even more sales

The Dow and S&P 500 have fallen for six straight days, many of them seeing a general sell-off in what are known as “washout” days.

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That can sometimes be a contrarian buy signal on Wall Street, but many investment experts are skeptical that the sell-off is over. One reason is that revenue expectations for next year show more solid growth, which is unlikely in the event of a recession.

“If we start to see a turnaround in the 2-year yield … and if we start to see a turnaround in the dollar, we know that gives us the ability to emerge from these oversold conditions,” said chief investment officer Andrew Smith. Strategist at Delos Capital Advisors in Dallas. “But I’m having a hard time convincing myself that the earned story will be as good as we expect it to be.”

Additionally, Smith said, dramatic moves in the bond and currency markets could mean “something is broken,” and it might be wise to wait for that information to emerge.

On the positive side, Smith pointed to a strong labor market and signs of continued spending on travel as signs that the U.S. economy could avoid a major recession.

– Jesse Pound

The future will open up more

Stock futures rose slightly after trading opened at 6 p.m., with Dow futures up more than 60 points at the same time, though those gains pared.

Nasdaq 100 futures had three big early jumps, suggesting technology could continue to outperform on Wednesday.

– Jesse Pound

The S&P 500 will hit June lows on Tuesday

Although Tuesday’s closing levels showed relatively modest daily moves, the S&P 500 fell short of year-earlier intraday lows during the session. The move was seen by many as confirming the failure of the summer rally for stocks.

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The S&P 500 is now 24.3% off its record high, and the Dow is in bear market territory, down roughly 21.2%. The Nasdaq Composite, its decline since last November, is 33.2% below its high-water mark.

The next key benchmark for investors in the coming days could come from the bond market, where the 10-year Treasury yield has climbed below the 4% mark.

– Jesse Pound, Christopher Hayes

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