Falling stock futures, sliding bond yields

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Stock futures fell on Thursday and government bond yields continued to fall as investors continued to back off bets on a wave of high growth and inflation.

S&P 500 futures are down 1%, indicating that the broad gauge of the stock market will dip at the opening bell a day after closing at all-time highs. Contracts for the Dow Jones Industrial Average lost 1.1%, as did the high-tech Nasdaq 100 futures contracts.

Stocks have surged to a string of record highs this year, but some investors have raised concerns about the outlook for the economy amid signs that labor shortages and supply chain bottlenecks may hamper the pace of recovery. The worldwide spread of the highly contagious delta type of coronavirus is raising concerns. Investors are also preparing for a flurry of volatility in summer trading, when trading desks tend to be understaffed.

“There is little recognition that things are not looking as positive from an economic standpoint as they were in mid-June when everything seemed to be hitting Goldilocks middle ground,” said Edward Park, chief investment officer at Brooks MacDonald. “Delta, or the next delta, is going to be a recurring risk in the markets,” Park said, adding that surveys of US activity have fallen short of expectations in recent days.

Government bonds continued to rise, bringing the yield on the 10-year Treasury to 1.291% from 1.321% on Wednesday. The benchmark yield, which helps determine borrowing costs across the economy, was less than 1.3% in February. Yields fall when bond prices rise.

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