U.S. Equity Futures Drop on Continued Bond-Market Worries

MarketsDow Jones Newswires

U.S. stock futures fell Thursday, following the declines in European stocks and losses in government bonds across the globe.

S&P 500 futures slipped nine points, or 0.4%, to 2107. E-mini Dow futures lost 70 points, or 0.4%, to 18026. E-mini Nasdaq-100 futures fell 26 points, or 0.6%, to 4501. Changes in stock futures don't always accurately predict moves in the stock market after the opening bell.

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European stocks and German government bonds fell. Germany's DAX lost 0.9% and France's CAC-40 declined 1%. The yield on the 10-year German bund hit 0.99% earlier Thursday, marking its highest level since September. In recent trade, the 10-year bund yield was at 0.875%. Yields rise as prices fall.

The selloff in government bonds across the globe slammed Asia on Thursday. Yields on 10-year bonds in Singapore hit their highest level in almost two years. Australian yields jumped to their highest levels of 2015 and yields in Japan hit their highest since November.

The yield on the 10-year Treasury note was at 2.341%, compared with 2.366% on Wednesday.

Even as government bonds have sold off in recent sessions, the U.S. stock market has remained relatively quiet. Amid a backdrop of quiet trading, the Dow has gained 0.4% for the week, through Wednesday's close, while the S&P has added 0.3%. In the same period, the yield on the 10-year Treasury note has notched its biggest three-day increase since June 2013.

Positive economic data in the U.S. and Europe, such as continued improvement in the U.S. labor market and robust eurozone inflation, have been driving moves in government bonds, investors say. Economic reports have been receiving extra scrutiny recently as investors gauge when the Federal Reserve will begin to raise short-term rates, which have been held near zero since December 2008.

"The better the economic news is, the more conviction that people have that the Fed will actually move in September," said Steven Rees, global head of equity strategy at J.P. Morgan Private Bank.

"There's renewed nervousness about the impact of higher rates on the overall economy," Mr. Rees added. "We don't think a small hike in September changes the growth dynamic in the U.S. at all and we continue to like equities here," he said.

Chinese stocks swung sharply Thursday. The Shanghai Composite Index slumped as much as 5.3% before recovering to end higher on the day, up 0.8%.

The swings in government bonds come a day after European Central Bank President Mario Draghi said investors would have to adjust to volatility in financial markets.

In Greek news, European officials said Greek Prime Minister Alexis Tsipras and his country's international creditors were able to agree on some parts of a financing deal on Wednesday night, but differences remain on some key issues.

U.S. stock futures remained lower after an update on the labor market. Jobless claims fell 8,000 to 276,000 in the week ended May 30, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected 279,000 new claims.

On Friday, the government's employment report is expected to show the addition of 225,000 jobs in May.

In corporate news, Dish Network Corp. is in talks to merge with T-Mobile US Inc., The Wall Street Journal reported. Dish shares rose 5.9%, and those of T-Mobile US advanced 6.3% in premarket trading.

In commodity markets, gold futures slipped 0.6% to $1178.20 an ounce. Crude-oil futures lost 0.6% to $59.29 a barrel.