Wall St hobbled by rising bond yields
Wall St hobbled by rising bond yields
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: June 12 2007 13:52 | Last updated: June 12 2007 13:52
Wall Street was set for a lower start on Tuesday, as a further rise in bond yields weighed on sentiment.
Concern is growing among stock traders that higher yields will slow merger and acquisition activity as financing for deals increases.
Less than an hour before the opening bell, S&P 500 futures were down 4.4 points at 1,520.80 and were trading below fair value of 1,521.18.
The yield on the 10-year bond rose to a high of 5.21 per cent in early New York trade and was recently 3.7 basis points higher at 5.187 per cent.
“The bond-market sell-off primarily reflects the market’s re-rating of global and US growth and policy prospects,” said Ted Wieseman, economist at Morgan Stanley. “Interest rates have backed up more quickly than we expected last month, threatening tighter financial conditions and more subdued growth and inflation.”
Meanwhile, in earnings news, Lehman Brothers reported net income rose 27 per cent over the past year to a record $1.3bn. The stock was up 2.8 per cent at $77.78 in pre-market trade, after a gain of 2 per cent on Monday. The stock set a high for the year of $85.80 in early February.
The bank said its diversified operations helped offset a 14 per cent fall in its fixed income revenues, from bonds, derivatives and credit products, due to ”continued weakness in the US residential mortgage business.”
Contributing to a weaker tone on Tuesday was a narrowing in second-quarter guidance from Texas Instruments. In pre-market activity, the chip maker’s shares were 2.2 per cent lower at $35.02.
Economic data is light on Tuesday and traders are focused upon the May retail sales report due on Wednesday and the Consumer Price Index report due on Friday.
Nasdaq futures were down 7.5 points at 1,923, below a fair value reading of 1,925.77.
Futures for the Dow Jones Industrial Average were down 46 points at 13,510.
Stocks closed mixed on Monday, as bond yields edged higher.
The S&P 500 index rose 0.1 per cent to close at 1,509.12. The Nasdaq Composite fell 0.05 per cent to close at 2,572.15. The Dow Jones Industrial Average closed a fraction higher at 13,424.96.
By Michael Mackenzie in New York
Copyright The Financial Times Limited 2007
Published: June 12 2007 13:52 | Last updated: June 12 2007 13:52
Wall Street was set for a lower start on Tuesday, as a further rise in bond yields weighed on sentiment.
Concern is growing among stock traders that higher yields will slow merger and acquisition activity as financing for deals increases.
Less than an hour before the opening bell, S&P 500 futures were down 4.4 points at 1,520.80 and were trading below fair value of 1,521.18.
The yield on the 10-year bond rose to a high of 5.21 per cent in early New York trade and was recently 3.7 basis points higher at 5.187 per cent.
“The bond-market sell-off primarily reflects the market’s re-rating of global and US growth and policy prospects,” said Ted Wieseman, economist at Morgan Stanley. “Interest rates have backed up more quickly than we expected last month, threatening tighter financial conditions and more subdued growth and inflation.”
Meanwhile, in earnings news, Lehman Brothers reported net income rose 27 per cent over the past year to a record $1.3bn. The stock was up 2.8 per cent at $77.78 in pre-market trade, after a gain of 2 per cent on Monday. The stock set a high for the year of $85.80 in early February.
The bank said its diversified operations helped offset a 14 per cent fall in its fixed income revenues, from bonds, derivatives and credit products, due to ”continued weakness in the US residential mortgage business.”
Contributing to a weaker tone on Tuesday was a narrowing in second-quarter guidance from Texas Instruments. In pre-market activity, the chip maker’s shares were 2.2 per cent lower at $35.02.
Economic data is light on Tuesday and traders are focused upon the May retail sales report due on Wednesday and the Consumer Price Index report due on Friday.
Nasdaq futures were down 7.5 points at 1,923, below a fair value reading of 1,925.77.
Futures for the Dow Jones Industrial Average were down 46 points at 13,510.
Stocks closed mixed on Monday, as bond yields edged higher.
The S&P 500 index rose 0.1 per cent to close at 1,509.12. The Nasdaq Composite fell 0.05 per cent to close at 2,572.15. The Dow Jones Industrial Average closed a fraction higher at 13,424.96.
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