US stock futures fell, led by losses in technology shares, as investors shunned both government bonds and stocks on worries that further interest-rate increases and China’s Covid-19 policies would weigh on growth.
Futures for the S&P 500 declined 1.7%, setting major indexes up for another day of losses after the New York opening bell. Contracts tied to the technology-focused Nasdaq-100 fell 2.2% while those for the Dow Jones Industrial Average receded 1.3%.
Investors have largely pulled back from both stocks and bonds after the Federal Reserve approved a half-percentage point increase in its benchmark lending rate last week. The move, part of the central bank’s efforts to contain elevated inflation, has left money managers uncertain about how much more the Fed may tighten in its quest to control prices.
That financial tightening has added to fears of a slowdown in global growth. China’s implementation of lockdowns and other measures to contain the spread of Covid-19 and Russia’s war against Ukraine have bolstered concerns of supply-chain disruptions and reduced consumer spending.
“The US equity market is quite expensive, particularly technology stocks, the market doesn’t know how high the Fed has to go to control inflation and we have the sense of a global slowdown,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “There’s a lot of negatives that are happening in the market.”
US government bonds sold off again, pushing the yield on the benchmark 10-year Treasury note to 3.155% on Monday from 3.124% on Friday. That put it on course to settle at a fresh multiyear high. The 10-year yield had risen 1.6 percentage points since the end of 2021 through Friday, leading some investors to reassess the valuations of technology and growth stocks. Bond yields rise when prices fall.
The Cboe Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—rose to 33.51, on course for its highest closing level since March 8.
“The market volatility shows that there is great uncertainty about where people think we are headed,” said Peter Andersen, founder of Boston-based investment firm Andersen Capital Management.
The prospect of further interest-rate increases to combat inflation has worried some investors that such measures will slow economic growth.
Those fears have led some money managers to hold the dollar, seen as a safer investment in times of volatility, due to its status as the world’s reserve currency. The WSJ Dollar Index, which measures the US currency against a basket of 16 others, edged up 0.1% Monday.
In commodities, Brent-crude futures prices fell 2.1% to $110.01 a barrel. Elevated oil prices since the start of Russia’s war against Ukraine have begun to moderate as traders worry that lockdowns to contain the spread of Covid-19 in China will sap global demand.
The price of bitcoin tumbled through the weekend and traded at $33,010.70 Monday, down 8.5% from Friday’s 5 pm ET level. The popular cryptocurrency has lost more than a quarter of its value in the year to date period.
Shares of cryptocurrency companies fell in premarket trading Monday alongside bitcoin. Crypto exchange Coinbase Global shares fell 6.6%, while bitcoin mining company Marathon Digital Holdings shares declined 7%.
Shares of Tyson Foods rose 3.4% premarket after it reported quarterly profit and revenue that beat analysts’ expectations.
Overseas, the pan-continental Stoxx Europe 600 fell 2%, led by declines in the basic resources and travel and leisure sectors.
In Asia, Japan’s Nikkei 225 dropped 2.5% on Monday, while Australia’s S&P/ASX 200 fell 1.2%.
China’s CSI 300 index, tracking the largest companies listed in Shanghai or Shenzhen, declined 0.8%. Hong Kong markets were closed for a public holiday.
Write to Caitlin Ostroff at email@example.com and Serena Ng at Serena.Ng@wsj.com
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