September looms as a risk month for stocks, Yardeni says
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* 10-year Treasury yields at highest since Jan 2020
* Weekly jobless claims rise unexpectedly in the latest week
* Futures: Dow flat, S&P down 0.65%, Nasdaq drops 1.63%
(Adds comment, details; updates prices)
By Shashank Nayar and Medha Singh
March 18 (Reuters) - The Nasdaq was set to drop sharply at
the open on Thursday as bond yields hit 14-month highs after the
Federal Reserve pledged to tolerate inflation and keep monetary
policy loose through 2023.
Yield-sensitive tech stocks such as Apple Inc AAPL.O ,
Facebook Inc FB.O , Netflix Inc NFLX.O , Amazon.com Inc
AMZN.O and Microsoft Corp MSFT.O dropped between 1.2% and
1.6% in premarket trading.
The yield on the benchmark 10-year notes US10YT=RR crossed
1.75% on Thursday, for the first time since Janurary 2020,
dragging futures tied to tech-heavy Nasdaq 100 index down 1.5%.
The Dow on Wednesday surpassed 33,000 points for the first
time after the Fed projected strongest growth in nearly 40 years
as the COVID-19 crisis winds down, and repeated its pledge to
keep its target interest rate near zero for years to come.
Opinions among the Fed's 18 current policymakers did shift
somewhat, with four now expecting rates may need to rise next
year and seven seeing a rate increase in 2023.
"Although the Fed is saying they will remain accommodative,
the point that the markets are grabbing on to is that there are
more policymakers seeing a move in rates," said Fiona Cincotta,
senior financial market analyst at Gain Capital in London.
While inflation is expected to exceed the Fed's 2.0% target
to 2.4% this year, Fed Chair Jerome Powell views it as a
temporary surge that will not change the central bank's stance.
A $1.9 trillion spending stimulus sparked fears of rising
inflation that triggered a jump in longer-end Treasury yields,
leading to a rotation into value stocks at the cost of
high-growth tech stocks.
Futures were little changed after data indicated the number
of American filing for jobless benefits unexpectedly rose last
week. A separate report showed the Philly Fed business index
jumped more than expected to its highest level since 1973.
"If economic data is better than expected before those
stimulus checks hit the accounts and the reopening is fully in
force, the economy is going to get hotter from there," added
Cincotta.
At 8:40 a.m. ET, Dow E-minis 1YMcv1 were down 5 points, or
0.02%, S&P 500 E-minis EScv1 were down 25.75 points, or 0.65%
and Nasdaq 100 E-minis NQcv1 were down 215.75 points, or
1.63%.
Big U.S. banks that are sensitive to economic outlook
including JPMorgan Chase & Co JPM.N , Bank of America Corp
BAC.N , Citigroup Inc C.N and Goldman Sachs GS.N ,
outperformed in premarket trade.
In corporate news, Accenture ACN.N jumped about 5% after
the IT consulting firm raised its full-year revenue forecast and
reported second-quarter revenue above analysts' estimates, as
more businesses used its digital services to shift operations to
the cloud. Dollar General Corp DG.N dropped 4.7% after the company
forecast annual same-store sales and profit below estimates,
indicating the pandemic-fueled rush for lower-priced groceries
was waning faster than expected. The so-called meme stock AMC Entertainment AMC.N rose 2.6%
after the movie theater operator said it would have 98% of its
U.S. locations open from Friday.