Futures for the Dow Edge Higher as Inflation Fears Cap Gains

On Friday, U.S. stock markets experienced a deepening of losses as escalating Treasury yields and weakness in semiconductor stocks indicated the Nasdaq's potential for its first consecutive weekly declines in almost five months.

‍

The Dow Jones Industrial Average (DJIA) dropped by 61 points, or 0.2%, to 38,837. Similarly, the S&P 500 (SPX) declined by 19 points, or 0.4%, reaching 5,131. Meanwhile, the Nasdaq Composite (COMP) shed 92 points, or 0.6%, reaching 16,033. According to FactSet data, both the S&P 500 and Nasdaq were tracking weekly losses, with the former down by 0.1% and the latter by 0.6%. However, the Dow remained in positive territory for the week, up by 0.2%.

‍

This decline in U.S. stocks during the week came against a backdrop of volatility, driven partly by the ongoing uptick in Treasury yields, causing unease among traders.

‍

FactSet data indicated a rise of 1 basis point in the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) on Friday, following a substantial increase of more than 10 basis points the day prior. Market analysts attributed this market unease to discouraging inflation figures and concerns about stocks potentially reaching overbought levels too rapidly.

‍

Victor Cossel, a senior macroeconomic strategy analyst at Seaport Research Partners, remarked during an interview with MarketWatch that recent inflation data, including the consumer-price index (CPI), producer-price index (PPI), and import prices, have been consistently higher than expected. This has led to growing concerns about stagflation, which in turn has prompted a breakout in long-term 10-year yields.

‍

The import price index rose by 0.3% last month, aligning with Wall Street forecasts, while import prices excluding fuel increased by 0.2%. Additionally, the New York Fed's Empire State business-conditions index, reflecting manufacturing activity in the state, plummeted by 18.5 points in March to negative 20.9. Despite a slight rise in U.S. industrial output in February following a decline in January, a closely monitored survey showed a slight dip in consumer sentiment in early March from a 32-month high.

‍

Semiconductor stocks sustained their downward trajectory on Friday, with companies like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD) contributing to the Nasdaq's tech-heavy declines. This decline in semiconductor stocks commenced last week after Broadcom Inc. (AVGO) and Marvell Technology Inc. (MRVL) issued disappointing earnings guidance alongside stronger-than-expected quarterly results.

‍

Investors were also closely monitoring crude oil prices, which experienced a slight decline on Friday but remained on course for a weekly increase of more than 3%. U.S.-traded futures for West Texas Intermediate crude remained above $80 a barrel.

‍

Additionally, attention was drawn to the quarterly triple witching, where options linked to over $5 trillion in stocks, exchange-traded funds, and equity indexes were set to expire on Friday.

‍