U.S. stock futures volatile as Wall Street strives to break 2-week losing streak

What’s driving markets

Futures are a touch firmer, having bounced off session lows, but the cautious mood of late is seeping into the new week, with sentiment not helped by lingering concerns about prospects for China’s economy.

The S&P 500 has just recorded two consecutive weeks of losses, shedding 2.6% in the process, after the rally faltered in many big technology stocks such as Apple
AAPL,
+0.03%
and Nvidia
NVDA,
-3.62%.

Choppiness in the benchmark 10-year Treasury yield
BX:TMUBMUSD10Y,
which has moved to within just several basis points of its highest level since the Great Financial Crisis, partly on expectations of increased government issuance, has discouraged stock bulls.

“Although markets have not experienced any significant meltdowns, they’ve been riding a steady downdraft. Last week, the rates markets capped equity gains as U.S. yields rose, possibly due to supply and economic resilience. Indeed, equities had their roughest start to the month since March as tech stocks have given up gains as U.S. yields lurch higher, even as inflation falls,” said Stephen Innes, managing partner at SPI Asset Management.

With more than 90% of the S&P 500 having reported, the second quarter earnings season is starting to wind down, though retailers will be a feature in coming days as Home Depot
HD,
+0.52%,
Target
TGT,
+0.10%
and Walmart
WMT,
+0.59%
present their numbers.

“While the company news decelerates, there is no shortage of further economic clues for investors to digest, including the latest Fed minutes, building permits and housing starts data, and a general housing market index release,” said Richard Hunter, head of markets at Interactive Investor.

A sour tone from Asia was containing any rise in risk assets on Monday, after Country Garden Holdings
2007,
-18.37%,
China’s biggest homebuilder, saw its shares plunge to another record low on news it was suspending trading in around 11 of its mainland bonds. The news added to fears about the health of the world’s second biggest economy and left Hong Kong’s Hang Seng
HK:HSI
down 1.7%.