Stock Market Today: Nasdaq Futures, Bitcoin Fall as Bond Yields Jump, Oil Surges

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Stocks were falling Tuesday as bond yields spiked to a new Covid-19 pandemic high and oil surged amid geopolitical tensions in the Middle East.

Futures for the

Dow Jones Industrial Average
indicated an open 285 points or 0.8% lower, after the index declined 201 points Friday to end at 35,911. Futures for the

S&P 500
signaled a 1.2% drop at the open while the

Nasdaq
was on track to fall 1.9%.

Overseas, the pan-European

Stoxx 600
fell 1.2% and Hong Kong’s

Hang Seng Index
slipped 0.4%.

Stocks were under pressure as Wall Street returned from a holiday Monday. In focus was a jump in bond yields as investors fretted over high inflation and the prospect of multiple interest-rate increases this year from the Federal Reserve.

“U.S. equity futures are flashing red amid a jump in Treasury yields, as investors brace for the Federal Reserve to raise interest rates four times this year to tame inflation,” said Lukman Otunuga, an analyst at broker FXTM.

The yield on the benchmark 10-year U.S. Treasury note was up to 1.83% Tuesday—its highest level since the beginning of the pandemic—after ending Friday at 1.79%. It began the year at 1.53%. 

Higher yields tend to discount the present value of future cash, adding pressure to technology stocks in particular, because the valuations of many high-growth tech companies bank on the prospect of profits years in the future. That could explain the underperformance on the horizon for the Nasdaq, which is heavily weighted with tech stocks.

In the day ahead, investors are likely to react to corporate earnings from the likes of

Goldman Sachs

(ticker: GS),

Charles Schwab

(SCHW),

Truist Financial

(TFC), and others. Stocks fell Friday amid a mixed, but mostly downbeat, reaction to

Big Bank

earnings from

JPMorgan Chase

(JPM),

Citigroup

(C), and

Wells Fargo

(WFC).

“Equity markets will look to company results for some direction as the fourth-quarter earnings season gets into full swing,” Otunuga added. “Should we witness another mixed or disappointing week of results, this could sap more confidence from stock market bulls, especially when considering that the broader S&P 500 index is already down over 2% so far this year.”

In the commodity space, oil was at its highest level since 2014 amid geopolitical tensions in the Middle East, with Iran-backed fighters in Yemen claiming to have launched drone strikes at the United Arab Emirates. The U.A.E. is a major producer of crude and an influential member of OPEC+, the group of national exporters that includes Saudi Arabia and Russia.

Futures contracts for international oil benchmark Brent were up 1.5% to around $87.50 a barrel, with U.S. futures for West Texas Intermediate crude similarly up to above $85.

Cryptocurrencies, which have shown themselves in recent weeks to be sensitive to monetary policy as risk assets, were lower.

Bitcoin,
the leading crypto, was down 2.5% over the last 24 hours to below $42,000, according to data from CoinDesk. Smaller peer

Ether
fell 3.5% over the same period to around $3,150.

Write to Jack Denton at jack.denton@dowjones.com