US stock futures fell in early trading on Wednesday as the 10-year Treasury yield – the main economic pillar – briefly rose above 4%, marking a closely watched level for the worst bond sale in decades.
S&P 500-related futures fell 0.7%, bringing the index back to below its June low of 3,637. Dow Jones Industrial Average futures fell 150 points, or about 0.5%, and contracts on the Nasdaq Composite were down 1.2%.
Shares of Apple Inc (AAPL) fell about 3.7% ahead of its launch after a report that the tech giant is backing off its plans to ramp up production of new iPhones this year after demand for the product failed to meet expectations.
Elsewhere on the corporate front, Biogen (BIIB) stock is up nearly 45% in extended trading after a successful trial of its experimental Alzheimer’s drug. News that the test slowed Alzheimer’s disease progression by 27% compared to a placebo in a clinical trial also boosted shares of drug companies like Eli Lilly (LLY), which are up more than 7%.
Big moves across fixed income and currency markets were in focus Wednesday morning as central bank concerns and recession kept investors on edge. On the bond front, the benchmark 10-year Treasury bond temporarily exceeded 4%, the highest level since 2008, before retreating to around 3.9%.
“U.S. Treasury price volatility has long been reaching statistically extraordinary levels right now, just as it did in June 2022,” DataTrek’s Nicholas Colas said in a morning note. “US stocks bottomed out that month once yields stabilized.”
Meanwhile, the rise in the US dollar index continued to shake global currency markets. The euro fell to its weakest level since 2008, briefly dropping below $0.96 for the first time since 2002.
Also across the Atlantic, the Bank of England said it would make temporary purchases of long-term British government bonds, an emergency intervention to help stabilize its currency.
“If the dysfunction in this market continues or worsens, there will be a material risk to financial stability in the UK,” Bank of England officials said in a statement on Wednesday morning. “This would lead to an unjustified tightening of financing conditions and reduce the flow of credit to the real economy.”
Back in the US, some Wall Street giants have turned bearish in equities, signaling the risk of a global recession as central banks take the most aggressive monetary action in decades.
Strategists at BlackRock Investments Institute (BLK) said policy makers are underestimating the amount of economic pain needed to bring inflation down quickly.
“Markets haven’t priced that, so we avoid most stocks,” a team led by Jean Boivin said in a note earlier this week.
Goldman Sachs (GS), the number one investment bank on Wall Street, cut stocks to reduce the weight in its global allocations over the next three months, citing rising real returns as a headwind.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed
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