US open: Stocks head south, rising Treasury yields remain in focus
Wall Street stocks were in the red early on Wednesday as rising government bond yields continued to draw investor attention.
As of 1530 GMT, the Dow Jones Industrial Average was down 0.17% at 31,482.16, while the S&P 500 was 0.36% softer at 3,867.35 and the Nasdaq Composite came out the gate 1.10% weaker at 13,316.55.
The Dow Jones opened 55.19 points lower on Wednesday, cutting into modest gains recorded a day earlier after Federal Reserve chairman Jerome Powell told the Senate Banking Committee that inflation was still "soft" and stated the US economy was "a long way" from its goals for both employment and inflation goals.
Powell's testimony on Capitol Hill will continue on Wednesday, with the Fed head now addressing the House of Representatives Financial Services Committee.
Wednesday's primary focus looked set to be the 10-year Treasury yield note, topping 1.4% to hit its highest level since February 2020 and potentially seen as something that could prompt investors to rotate out of stocks and into bonds, while also hamstringing growth companies in the technology sector that had previously benefited from the low-rate environment.
Biden's Covid-19 stimulus plan was also in focus early on Wednesday, with the Democrat-led House likely to approve the stimulus package before the President looks to push the full package through the Senate.
On the macro front, mortgage applications fell 11.4% in the week ended 19 February, according to the Mortgage Bankers Association, as higher mortgage rates weighed on demand.
"Mortgage rates have increased in six of the last eight weeks, with the benchmark 30-year fixed-rate last week climbing above 3% to its highest level since September 2020," said MBA's Joel Kan. "As a result of these higher rates, overall refinance activity fell 11% to its lowest level since December 2020, but remained 50% higher than a year ago.”
Elsewhere, new home sales increased to 923,000 in January, according to the Department of Commerce, well ahead of both estimates for a reading of 856,000 and last month's revised reading of 885,000.
Federal Reserve heads Lael Brainard and Richard Clarida will also both deliver comments throughout the course of the day.
In the corporate space, Tesla shares were in the green after word broke that Ark Invest's Cathie Wood raised her stake in the firm by more than $120.0m during Tuesday's selloff, while Johnson & Johnson was in focus after the Food and Drug Administration approved the pharmaceutical giant's single-shot Covid-19 vaccine for emergency use.
Hostess Brands, L Brands, Nvidia and Forterra will all post quarterly earnings after the close.