Mixed market futures are pushing stocks down today as uncertainty abounds. The primary factor behind this movement is Treasury yield backup. Investors are eyeing this keenly as the Federal Reserve’s next policy meeting looms.
InvestorPlace contributor Bret Kenwell recently speculated that the combination of bonds and the 10-year Treasury yield rising could threaten the market’s recent rally. Today, multiple yields have reached high points, causing markets to react. With the Fed scheduled to meet again in just weeks, these rising yields are of key interest.
While these factors are casting a dark shadow over markets today, the news isn’t all bad. Salesforce (NYSE:CRM) recently reported fourth-quarter earnings, sending shares up in after-hours trading yesterday. Today, this momentum is helping the Dow Jones Industrial Average rise as CRM stock surges more than 10%. However, the S&P 500 and the Nasdaq Composite remain in the red.
Here’s what investors should know moving forward.
A Closer Look at the Forces Pushing Stocks Down
Of course, investors shouldn’t take too much confidence in Salesforce triggering a market rebound. While the Dow is rising, the momentum hasn’t carried over to other markets. The overall outlook remains negative. The fact that Tesla (NASDAQ:TSLA) is down after failing to report any major news regarding Part 3 of CEO Elon Musk’s Master Plan doesn’t bode well for the Nasdaq, either. This is likely also contributing to the negative momentum hurting stocks right now.
That said, the Treasury yield news will keep investors on watch as well, especially as the next Fed meeting approaches. Per Yahoo! Finance:
“On the front end of the Treasury curve the yield on 2-year notes continued to trade near its highest level since 2007. The 2-year yield, which stood near 4.8% on Thursday morning, is seen as the best proxy for investor expectations of the Fed’s near-term path for interest rates.”
Interest rates will remain a point of focus until the Fed hands down its next decision, too. And as InvestorPlace’s Shrey Dua reports, rate hikes may not be ending soon. In fact, the recent Consumer Price Index (CPI) and job reports may mean more hikes are on the way.
Although markets should rebound, the factors pushing stocks down today will likely continue weigh on them until the next meeting alleviates the current uncertainty.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
