The Friday Market Minute
- Wall Street extends its week-to-date decline as Treasury yields bump higher and global stocks book their second consecutive week of losses amid concerns over growth prospects in China and the pace of the U.S. recovery.
- Indebted property developer China Evergrande continues to rattle investors in Asia as it faces $150 million in coupon payments later this month.
- Record inflows into U.S. big caps providing some support Friday, but next week's Fed meeting expected to be major market catalyst.
- Friday brings 'Quadruple Witching Hour' to Wall Street with the quarterly expiration of futures and options on indices and futures and options on single stocks.
U.S. equities traded lower Friday, while world stocks looked set to book their second consecutive weekly decline, as investors remain focused on slowing growth and financial risk in China and the Delta variant impact of the global economic recovery.
A big jump in benchmark 10-year Treasury note yields, which last traded at 1.385%, pushed tech stocks lower Friday, as well, in early Friday dealing as data showed consumer sentiment stabilizing following the late summer hit from Delta infections.
Asia stocks notched a modest overnight rebound, but remain red for the week amid data showing a notable slowdown in China, concerns over Beijing's corporate crackdown and speculation that deeply-indebted property developer China Evergrande may trigger systemic risk to the regional's financial markets.
In the U.S., a stronger-than-expected reading for August retail sales, as well as continued equity market inflows -- including a record $28.3 billion into big cap funds this week, according to Bank of American 'Flow Show' data - - has provided some support for stocks ahead of next week's Federal Reserve policy meeting, but with Friday's quadruple witching hour -- where futures and options on stocks and indices expire simultaneously -- expected to bring late-hour volatility, pre-market trading remains relatively muted in terms of trading volumes.
The Dow Jones Industrial Average fell 180 points in the opening hour of trading while the broader S&P 500 was down 35 points on the session, extending its the decline from its September 2 all-time high to around 2.1%.
The tech-focused Nasdaq Composite fell 145 points as benchmark 10-year note yields rose 3 basis points to a two-month high of 1.385% in early Friday trading.
U.S. Steel Corp (X) - Get United States Steel Corporation Report shares were an active early mover, falling 7.1% after the group forecast record third quarter profits and unveiled plans for a new $3 billion mill that will start producing in 2024.
Diamondback Energy was also on the move, rising 4% after the Periman-focused oil group boosted its buyback and shareholder return plans.
Pfizer (PFE) - Get Pfizer Inc. Report shares were also in focus, fallin 1.03 to $44.00 each, as the Vaccines and Related Biological Products Advisory Committee to the Food & Drug Administration debates approval of a booster shot for its two-dose 'Comirnaty' coronavirus vaccine.
Zoom (ZM) - Get Zoom Video Communications (ZM) Report shares were also active, rising 2.05% from a four-month low, following a report that shareholder advisory service ISS will recommend Five9 (FIVN) - Get Five9 Inc. Report shareholders reject its $15 billion all-stock takeover.
In other markets, oil prices slipped from near two-month highs on demand concerns and profit-taking, but traders remain wary of the slow return to production for Gulf drillers and refiners following damage and evacuations linked to Hurricanes Nicholas and Ida.
WTI futures for October delivery fell $1.33 from last night's close to trade at $71.28 per barrel while Brent contracts for November fell 93 cents to $74.71 per barrel.
European stocks got an early boost from Britain's plans to ease COVID-linked travel restrictions, but those gains faded as U.S. stocks drift lower, pulling the Stoxx 600 into a 0.9% decline by late afternoon in Frankfurt.
Overnight in Asia, Japan's Nikkei 225 closed 0.58% higher at 30,500.05 points amid speculation that outgoing Prime Minister Yoshihide Suga's replacement will be appointed in the coming weeks.
The region-wide MSCI ex-Japan index bumped 0.3% higher on the session, thanks in part to gains in Shanghai and Shenzen, although China Evergrande shares hit a fresh seven-year low in Hong Kong trading Friday to close at HK$2.54 each, extending their 2021 slump to around 83%.