Wall Street set to open lower on China report
Bengaluru: Wall Street was set to open sharply lower on Wednesday as investors were spooked by a report that China is considering slowing or halting purchases of US government debt.
The dollar dropped more than half a percent against a basket of currencies, while long-dated Treasury yields hit fresh 10-month highs after the Bloomberg report said the US bond market was becoming less attractive for Beijing.
"The futures are indicating a nasty opening as climbing yields awaken investors to a possible meltdown in the government bond market," Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a client note.
If losses hold until markets open, the Dow would open in the red for the first time in 2018.
"For a market that was probably looking for reason to take a pause, it's not unreasonable to use today's rise in yield as a catalyst," said Art Hogan, chief market strategist at B. Riley FBR in Boston.
The CBOE Volatility index, a widely followed measure of market anxiety, jumped 2 points from its life low of 8.56.
At 8:13am ET (1313 GMT), Dow e-minis were down 107 points, or 0.42%, with 32,766 contracts changing hands. S&P 500 e-minis were down 10.75 points, or 0.39%, with 223,418 contracts traded.
Nasdaq 100 e-minis were down 38 points, or 0.57%, on volume of 42,431 contracts.
The S&P and the Nasdaq closed at a record high for sixth day in a row on Tuesday on optimism ahead of quarterly earnings reports. Big banks JPMorgan and Wells Fargo will kick off the earnings season on Friday.
Fourth-quarter earnings for S&P 500 companies are expected to increase by 11.8%, with biggest contribution from the energy sector, according to Thomson Reuters.
"It will be the first time that Corporate America has the ability to talk about guidance that incorporates lower tax rates. It's going to confusing and noisy but will be fascinating, " Hogan said.
Among stocks, shares of No.2 US homebuilder Lennar Corp fell 1.66% after its profit missed estimates due to a delay in the booking of a single large transaction.
Nordstrom shares were down about 5% after reporting its holiday period same-store sales.
Nvidia slipped 1.45% after the chipmaker said some of its chipsets have been affected by a memory corruption flaw. Reuters