U.S. stock-index futures pointed to a slightly lower open on Thursday, with technology stocks in particular looking to be a drag on the day after Cisco Systems reported disappointing quarterly results and as investors continued to watch a rise in bond yields.
What are markets doing?
Dow Jones Industrial Average futures YMM8, -0.12% slipped 20 points to 24,718, while S&P 500 futures ESM8, -0.08% fell 4.65 points, or 0.2%, to 2,718.50. Nasdaq-100 futures NQM8, -0.22% dropped 25.50 points, or 0.4%, to 6,911.75. The larger drop in the Nasdaq was due to Cisco, which weighed on the technology space.
On Wednesday, the Dow Jones Industrial Average DJIA, +0.01% rose 62.52 points, or 0.3%, to 24,768.93. The S&P 500 index SPX, +0.08% gained 11.01 points, or 0.4%, to 2,722.46, and the Nasdaq Composite COMP, +0.04% advanced 46.67 points, or 0.6%, to 7,398.30.
Standing out Thursday, the small-cap benchmark Russell 2000 index RUT, +0.34% hit an all-time high of 1,620.64. The index also closed at a record, ending at 1,616.37, a gain of 16.03 points, or 1%.
What’s driving the market?
Investor mettle may be tested as bond yields continued to climb Thursday. The yield on the 10-year Treasury note TMUBMUSD10Y, -0.03% was steady near a 7-year high at 3.1%. A move above 3% has been cited as a psychologically significant level that could make equities appear less attractive.
A second round of U.S.-China trade talks was set to begin in Washington on Thursday, which comes amid a running standoff between the two countries over tariffs. President Donald Trump said last weekend, he would try to help telecom group ZTE from going under as it has been targeted by a U.S. ban, but then said in tweets on Wednesday that he wasn’t caving to any demand from China over that company.
Meanwhile, questions are lingering over another geopolitical front—North Korea—after Pyongyang signaled a day earlier that Kim Jong Un might pull out of next month’s summit with Trump if the U.S. insists on denuclearization for the isolated nation.
What are strategists saying?
“There have been several consistent themes running in 2018, each shifting in level of importance as events unfold. None of these possible game-changers has fulfilled its potential yet, but none has been resolved either, so investors continue to factor in risk around trade with China, nuclearization of North Korea, conflict in the Middle East, rising bond yields and monetary policy mistakes,” said Lee Wild, head of equity strategy at Interactive Investor, in a note to clients.
What data are in focus?
Initial jobless claims rose by 11,000 to 222,000 in the latest week, the highest level in a month, although they were still near multidecade lows. The Philadelphia Fed manufacturing index came in at 34.4 in May, surging past expectations for a reading of 21.
What stocks are in focus?
1786, +0.47% 1786, +0.47% Cisco Systems Inc. CSCO, -3.10% was down 4% in premarket after services revenue at the networking giant fell short of Wall Street expectations, in earnings late Wednesday. The stock, a Dow component, looked to be one of the biggest drags on the overall market.
J.C. Penney Co. Inc. JCP, -11.40% slumped nearly 9% in premarket trading after reporting a drop in first-quarter sales and cutting its outlook.
Shares of Williams Companies WMB, +1.28% rose 2% after the natural gas infrastructure company said it would buy the outstanding common shares of Williams Partners LP WPZ, +5.26% in a deal valued at $10.5 billion. Williams Partners shares rose 5.5%.