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Top 5 Things to Know in the Market on Wednesday

EconomyApr 25, 2018 05:57AM ET
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© Reuters. 5 key factors for the markets on Wednesday - Here are the top five things you need to know in financial markets on Wednesday, April 25:

1. Bellwether earnings to grab attention

Even as disappointing guidance from the likes of Caterpillar (NYSE:CAT), 3M (NYSE:MMM) and Lockheed Martin (NYSE:LMT) was blamed for the shadow cast over stocks a day earlier, a deluge of reports from bellwether firms will likely continue to focus attention on Wednesday in a session with no major economic reports.

In a notable exception to the downbeat outlook, shares of Texas Instruments (NASDAQ:TXN) soared more than 5% in the after hours market after the semiconductor company gave guidance for the current quarter that beat on both the top and bottom line.

Among 50 S&P firms reporting on Wednesday, Twitter (NYSE:TWTR) and Boeing (NYSE:BA) will be the big names to watch before the bell, while Facebook (NASDAQ:FB), AT&T (NYSE:T), Visa (NYSE:V), AMD (NASDAQ:AMD), Ford (NYSE:F) and eBay (NASDAQ:EBAY) will be among the shower of earnings arriving after the market close.

2. 10-year Treasury yields continue to rise

After closing a day earlier above the 3% symbolic threshold, the upward moment in the yield on 10-year Treasuries continued on Wednesday.

At 5:55AM ET (9:55GMT), the yield, which moves inversely to bond prices, was last up 1.2% at 3.018%, just off an intraday high of 3.032%, its highest level since January 2014.

Many analysts pinned the 3% level as the point at which bond yields would begin to damage equities. Rising bond yields can crimp demand for assets perceived as riskier, such as stocks, particularly when those yields are higher than those of equities.

Increasing yields have been touted as reflecting expectations that wages and inflation could be on the rise, increasing the odds for a more hawkish approach from the Federal Reserve.

Markets have recently upped bets for interest rate hikes with two more increases priced in and the possibility of a fourth for all of 2018 hovering just below the 50% threshold.

3. Stocks continue in risk-off mode ahead of earnings, yield pressure

World shares were on their longest losing streak of the year on Wednesday, as a rise in U.S. bond yields above 3% and warnings from top global firms about rising costs fed fears a boom in earnings may have peaked

After the sharp selloff seen a day earlier, U.S. futures pointed to another move lower on Wednesday as bond yields continued to pressure equities and investors looked for respite from a deluge on earnings reports.

At 5:55AM ET (9:55GMT), the blue-chip Dow futures fell 71 points, or 0.30%, S&P 500 futures lost 9 points, or 0.33%, while the Nasdaq 100 futures traded down 30 points, or 0.45%.

Elsewhere, European stocks shared the risk-off sentiment with all major indices heading lower near midday trade as positive earnings failed to offset concerns over rising bond yields.

Earlier, Asian stocks were also pressured by the selloff on Wall Street although a stronger dollar helped support Japan’s Nikkei 225 which ended just 0.2% lower.

4. Dollar hits 7-week high as yields rise

The U.S. dollar rose to seven-week highs against a currency basket on Wednesday, driven by rising Treasury yields with the U.S. 10-year bond yield, passing the 3% psychological level, its highest since early 2014.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.21% to 90.75 by 5:57AM ET (9:57GMT) That was off an intraday high of 90.89, its highest level since March 1.

The dollar was boosted by rising U.S. yields and the prospect of a faster pace of rate hikes by the Federal Reserve this year.

5. Oil steady below 3-year high

Crude prices were little changed in early action on Wednesday, steadying below the more than three-year highs reached the previous session, as investors looked ahead to fresh weekly data on U.S. commercial crude inventories to gauge the strength of demand in the world’s largest oil consumer and how fast output levels will continue to rise.

The U.S. Energy Information Administration will release its official weekly oil supplies report for the week ended April 20 at 10:30AM ET (1430GMT), amid forecasts for an oil-stock drop of around 2.0 million barrels.

Analysts also forecast a fall of 625,000 barrels for gasoline stockpiles, while distillate inventories are expected to drop by 861,000 barrels.

After markets closed Tuesday, the American Petroleum Institute said that U.S. oil inventories rose by roughly 1.1 million barrels last week.

U.S. crude oil futures edged forward 0.18% to $67.83 at 6:07AM ET (10:07GMT), while Brent oil inched up 0.04% to $73.89.

Top 5 Things to Know in the Market on Wednesday

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