February 4, 2018 / 11:55 PM / 21 days ago

U.S. stock futures open weaker; Treasury futures up on Sunday

NEW YORK (Reuters) - U.S. stock futures opened weaker on Sunday, extending the rout equity markets experienced on Friday when the benchmark S&P 500 and Dow Jones Industrial average notched their worst week since early January 2016.

Rising bond yields and prospects for increasing inflation undermined equities and pushed benchmark 10-year U.S. Treasury yields to a four-year high on Friday.

S&P 500 e-minis ESc1 traded down roughly 24 points before pulling back some ground to trade down 16 points after the first hour of trade, a loss of 0.60 percent.

Dow e-minis 1YMc1 were down 190 points, or 0.75 percent.

U.S. Treasury futures prices rose at the open but have since retreated and traded flat TYv1.

While the early indication is for weakness in the U.S. markets when regular trading resumes on Monday, it is how the day ends rather than begins, that will be the focus for investors, one strategist said.

“The futures opening lower portends this is a market that might need more of a sell-off, but we have got Asian and European trading hours to get through and futures can change quite markedly through the night,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

    “Overall you still have earnings coming out and they have been solid for the most part. It was a market that was poised to pullback at some point. It was overbought. This was a widely anticipated pullback, and nothing to be surprised by. The question is how much more does it have to pull back?” she said.

    On Friday, the Dow Jones Industrial Average .DJI fell 665.75 points, or 2.54 percent, to 25,520.96, the S&P 500 .SPX lost 59.85 points, or 2.12 percent, to 2,762.13 and the Nasdaq Composite .IXIC dropped 144.92 points, or 1.96 percent, to 7,240.95.

    The yield on the benchmark 10-year Treasury US10YT=RR reached a four-year peak at 2.852 percent on Friday after a strong U.S. jobs report raised concerns the U.S. Federal Reserve might hasten to increase interest rates to stem inflation.

    The U.S. dollar traded mixed in narrow ranges, with modest losses against the euro but slight gains against the yen in early Asian trade for the new week. [FRX/][.N]

    “I think fundamentally, there seems to be some uncertainty emerging with regard to the change in the Fed and until investors get a better handle on what (Jerome) Powell is like... that may keep investors on the sidelines,” Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama, said, referring to the incoming Fed Chair.

    Reporting by Renita D. Young and Daniel Bases; Editing by Susan Thomas

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