Yields rise, stock futures fluctuate ahead of inflation data, earnings

Contracts for the Nasdaq-100 rose 0.1% on Monday, indicating modest gains for the technology-focused index. Last week the Nasdaq Composite Index posted its biggest one-week percentage drop since February 2021. Technical valuations declined as bond yields rose. Futures for the S&P 500 and the Dow Jones Industrial Average were flat on Monday.

The yield on benchmark 10-year Treasury notes – which move inversely to their price – rose to 1.795% from 1.769% on Friday. Friday’s closing level was the highest since January 2020, when yields fell at the start of the pandemic.

Rising yields in early 2022 have sent a shiver through tech stocks. The rise in yields signals that the Federal Reserve may raise short-term interest rates in March and begin reducing its holdings of bonds and other assets soon thereafter.

Inflation data due on Wednesday will be closely watched as investors look to predict when the Fed will start raising borrowing costs. Monthly consumer prices are expected to increase by more than 7% from a year earlier for the first time since 1982.

This weekend, major US financial firms kicked off fourth-quarter earnings season as major US financial firms file results with JPMorgan Chase, Citigroup, Wells Fargo and BlackRock. Many investors are putting money in bank stocks, believing that they stand to profit from the rise in interest rates.

These include Honey Redha, multiset fund manager at Pinebridge Investments. He said the New York-based investment firm has cut its ownership of tech stocks and Treasuries while increasing cash holdings and exposure to financial companies.

“Equities are down and bonds are down too,” said Mr. Redha. “Even cash is better than owning risky assets, at least for a while.”

In commodities, US natural-gas prices rose 4.2% to $3.88 per million British thermal units. According to analysts at NatGas Weather, cold weather in the midwest and eastern US earlier this week is likely to boost fuel demand.

There was a mixed trend in the foreign stock markets. Stokes Europe 600 slipped 0.2%, weighing down on real estate and tech stocks. Shares of Atos fell 17% after the French information-technology firm said 2021 results fell short of expectations due to project delays and supply-chain challenges.

The Shanghai Composite Index rose 0.4% and Hong Kong’s Hang Seng 1.1%. Japanese markets remained closed for a public holiday.