S&P 500 is on Course for its Worst One-Week Performance
It is a good day for U.S. stock futures, as they edged higher on February 26, signaling a muted rebound for the S&P 500. On Thursday, the technology sector dropped by the most since October and dragged the broader market lower. Interestingly, futures tied to the S&P 500 ticked up 0.2% in turbulent trading.
It is worth noting that, the S&P 500 is on track for its worst-week performance in a month, having ended Thursday down almost 2% for the week. Contracts linked to the technology-heavy Nasdaq 100 gained less than 0.2% on Friday. Moreover, the Dow Jones Industrial Average futures wavered between gains and losses.
As a reminder, a swift selloff in the U.S. government bonds, as well as technology stocks on Thursday, took some investors by surprise. People should keep in mind that, yields on U.S. Treasurys, considered among the safest assets to own, continue to rise as money managers bet on a rapid economic rebound and pushed more funds into stocks and riskier assets.
However, the improving returns from bonds have also led to the view that technology stocks’ valuations are too high. Furthermore, investors say that the introduction of Covid-19 vaccines and a fresh fiscal stimulus package from the Biden administration will bolster the economic recovery in the longer term.
S&P 500 and different factors
Interestingly, Thursday’s selloff in the broader stock markets could entice some investors to begin buying again.
In bond markets, the yield on the 10-year Treasury declined to 1.475% from 1.513% on Thursday. As a reminder, it reached its highest closing level in a year.
Moreover, the pace of the recent rise in bond yields, which climb when prices fall, affected investors’ appetite for technology stocks.
It was not a great day for stocks in Asia. In Japan, the Nikkei 225 index declined 4%, its biggest one-day decline since April. At the same time, the Topix index fell 3.21% to end its trading day at 1,864.49.
China’s CSI 300 index dropped more than 2%.
Furthermore, South Kora’s Kospi Composite, as well as Australia’s S&P/ASX 200 each, fell more than 2%. Moreover, Hong Kong’s Hang Seng index fell more than 3%.
Shares of Samsung Electronics dropped 3.3%. Also, shares of SoftBank Group declined more than 4.5%. Moreover, Taiwan Semiconductor Manufacturing Co. fell more than 4.5% as well.
As mentioned above, the S&P 500 is on course for its worst-week performance in a month.
