NEW YORK: Wall Street was set to open sharply lower on Wednesday as investors were spooked by a report that China is considering slowing or halting purchases of US government debt.
The dollar dropped more than half a percent against a basket of currencies, while long-dated Treasury yields hit fresh 10-month highs after the Bloomberg report said the US bond market was becoming less attractive for Beijing.
"The futures are indicating a nasty opening as climbing yields awaken investors to a possible meltdown in the government bond market," Peter Cardillo, chief market economist at First Standard Financial in New York, wrote in a client note.
If losses hold until markets open, the Dow would open in the red for the first time in 2018.
"For a market that was probably looking for reason to take a pause, it's not unreasonable to use today's rise in yield as a catalyst," said Art Hogan, chief market strategist at B. Riley FBR in Boston.
The CBOE Volatility index, a widely followed measure of market anxiety, jumped 2 points from its life low of 8.56.
At 8:13 a.m. ET (1313 GMT), Dow e-minis were down 107 points, or 0.42 percent, with 32,766 contracts changing hands. S&P 500 e-minis were down 10.75 points, or 0.39 percent, with 223,418 contracts traded.
Nasdaq 100 e-minis were down 38 points, or 0.57 percent, on volume of 42,431 contracts.
The S&P and the Nasdaq closed at a record high for sixth day in a row on Tuesday on optimism ahead of quarterly earnings reports. Big banks JPMorgan and Wells Fargo will kick off the earnings season on Friday.
Fourth-quarter earnings for S&P 500 companies are expected to increase by 11.8 percent, with biggest contribution from the energy sector, according to Thomson Reuters I/B/E/S.
"It will be the first time that Corporate America has the ability to talk about guidance that incorporates lower tax rates. It's going to confusing and noisy but will be fascinating, " Hogan said.
Among stocks, shares of No.2 US homebuilder Lennar Corp fell 1.66 percent after its profit missed estimates due to a delay in the booking of a single large transaction.
Nordstrom shares were down about 5 percent after reporting its holiday period same-store sales.
Nvidia slipped 1.45 percent after the chipmaker said some of its chipsets have been affected by a memory corruption flaw.
Comments
Comments are closed for this article.