US stock futures dip, bond yields climb as Trump's tax bill faces test
NEW YORK : US stock index futures slipped and Treasury yields surged today as investors awaited the outcome of a pivotal debate around US President Donald Trump's tax-cut bill that has fanned concerns about the country's growing debt.
The gate-keeping House Rules Committee has scheduled an unusual 1am hearing that is expected to run well into daylight hours, as Republicans try to overcome internal divisions about cuts to the Medicaid health programme and tax breaks in high-cost coastal states.
Nonpartisan analysts say the proposed plan could add US$3 trillion to US$5 trillion to the federal government's US$36.2 trillion in debt.
'When tariffs and uncertainty reduce growth, further questions are also raised about how the US federal deficit will be affected by the economy,' Daniel Bergvall, head of economic forecasting at SEB said.
At 6.52am, Dow E-minis were down 409 points, or 0.96%, S&P 500 E-minis were down 0.71% to 5,917.5 points and Nasdaq 100 E-minis were down 154 points, or 0.72%.
US bonds have been pressured since the start of the week, when Moody's downgraded the country's sovereign credit rating.
Today, yields on the 30-year note were back up to 5% and the benchmark 10-year yield climbed 5.4 basis points to 4.53%.
Federal Reserve officials said yesterday that they expected tariffs to increase prices, but counselled patience before any interest-rate decisions were made.
Highly valued technology stocks took a hit in premarket trading as rising rates tend to discount the present value of future profits.
Nvidia led losses among top megacap and growth stocks and was down nearly 1%.
Among other movers, UnitedHealth Group tumbled over 7% after a Guardian report said the healthcare conglomerate secretly paid nursing homes thousands in bonuses to help slash hospital transfers for ailing residents.
HSBC also downgraded the stock to 'reduce' from 'hold'.
On the earnings front, retailer Target fell 1.6% after it slashed its annual forecast, citing a pullback in discretionary spending.
Lowe's rose 2.7% after it posted a smaller-than-expected drop in first-quarter comparable sales.
Wolfspeed tumbled more than 57% to US$1.3 following a report that the semiconductor supplier was preparing to file for bankruptcy within weeks.
US stocks closed lower yesterday, with the S&P 500 snapping a six-day winning streak while the Dow logged its first decline in four sessions.
Despite the losses, they have had a solid month so far. The S&P 500 is more than 17% higher than its April lows, when Trump's reciprocal tariffs roiled global markets.
A pause in the tariffs, a temporary trade truce between the US and China and tame inflation data have pushed equities higher, although the S&P 500 is still about 3% off its record highs.
Brokerage Morgan Stanley upgraded its stance on US equities to 'overweight', citing a slowing, but still expanding, global economy despite policy uncertainty.
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