Stock Futures Fall, Yields Rise, Earnings in Focus — and What Else Is Happening in the Stock Market Today

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Traders work on the floor of the New York Stock Exchange. (Photo by Spencer Platt/Getty Images)

Stocks were slipping Monday, with the technology sector down the most as bond yields rose to new heights.

Contracts linked to the Dow Jones Industrial Average fell 46 points, or 0.1%. S&P 500 futures declined 0.3% and Nasdaq Composite futures were down 0.5%.

The 10-year Treasury yield rose to 2.86% from a pandemic-era closing high of 2.83% Thursday before markets closed for Good Friday. Expectations that the Federal Reserve will soon begin reducing its bondholdings, part of the central bank’s effort to rein in relatively high inflation, have been driving yields higher.

That often hurts tech stocks the most. Many technology companies are fast-growing and valued on the basis that they’ll churn out a chunk of their profits many years in the future. Higher long-dated bond yields make future profits less valuable. 

Markets are hoping that earnings season can bring stocks higher. In the early going, first-quarter earnings reports for S&P 500 companies have beaten expectations, in aggregate, by 8.7%, according to Credit Suisse. 

Ryan Belanger, managing principal and founder of Claro Advisors, a wealth management firm based in Boston, said this week will be an important one for the stock market, with investors “eager for more earnings data to gauge how well companies are navigating inflation and rising labor costs.”

But so far, earnings reports haven’t provided a boost. The average one-day stock movement after earnings for a company that surpasses estimates has amounted to a 0.4 percentage point outperformance of the S&P 500’s move, according to Wells Fargo. But companies that miss on earnings have seen their stocks underperform the index by 2.9 percentage points. 

That’s partly because stocks still look expensive, especially as bond yields rise. That puts an even greater burden on companies to produce even higher profits than expected in order to move their stock prices upward. 

The good news is that it’s still early in earnings season. Just this week, about 15% of the S&P 500’s total market capitalization will report earnings. Among the reporters will be Tesla (ticker: TSLA), Netflix (NFLX) and Johnson & Johnson (JNJ). 

Asian shares finished Monday’s session with losses after China released mixed economic data. China’s gross domestic product in the first quarter rose a more than expected 4.8%, while retail sales fell 3.5% in March, wider than expectations.

Markets in Hong Kong remained closed for the Easter holiday as was most of Europe.

Here are six stocks on the move Monday:

DiDi Global (DIDI) shares traded in the U.S. sank 19% in premarket trading Monday after the Chinese ride-hailing company reported a fourth-quarter revenue decline of 12.7%, and said it was preparing to delist from the New York Stock Exchange.

Twitter (TWTR) rose 2.4% after the social media company on Friday adopted a so-called poison pill in a bid to ward off Elon Musk’s unsolicited $43 billion takeover offer.

Bank of America (BAC) stock gained 1.4% after the company reported a profit of 80 cents a share, beating estimates of 75 cents a share, on revenue of $23.3 billion, above expectations for $23.2 billion. 

Gap (GPS) stock gained 1.8% after getting upgraded to Equal Weight from Underweight at Morgan Stanley. 

Biogen (BIIB) stock gained 1.6% after getting upgraded to Overweight from Equal Weight at Wells Fargo. 

Wendy’s (WEN) stock fell 1.5% after getting downgraded to Market Perform from Outperform at BMO. 

Write to Joe Woelfel at joseph.woelfel@barrons.com and Jacob Sonenshine at jacob.sonenshine@barrons.com