Stocks Rise amid Higher Yields, Investors Await Earnings

World stocks lifted on Monday amid higher US bond yields, while investors await earnings results from top technology companies.

The S&P 500 futures were up by 0.2 percent to $2,676.40, while the Dow Jones Industrial (DJI) average rose by 0.02 percent to $24,467.01. On the other hand, tech heavy Nasdaq 100 futures gained 0.2 percent to $6,694.50.

Shares in Europe edged higher, with Germany’s DAX climbing 0.09 percent to €12,551.87. France’s CAC 40 added 0.3 percent to €5,427.10, while UK’s FTSE 100 was up by 0.3 percent to £7,396.39.

The pan-European Euro Stoxx 50 raised 0.3 percent to €3,505.55, while Spain’s IBEX 35 increased 0.1 percent to €9,896.00.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.7 percent to $562.73, while Japan’s Nikkei 225 closed 0.2 percent lower to ¥22,101.50.

US Yields Extend Gains, Near Peaks

Bond yields extended last week’s gains with the US 10-year Treasury note adding 0.8 percent to 2.977, after marking its highest since January 2014 of 2.97 percent earlier in the session, threatening once again the considerably essential 3 percent limit.

The last time yields got close to this number was back in 2013, when it dampened risk appetite and sent stocks tumbling.

The 2-year yield was up by 0.7 percent to 2.474, after reaching 2.470 earlier in the day, its highest level since September 2008.   

The raises came after expectations of continued rate hikes from the Federal Reserve grew further, as core inflation picked up the pace to 2.1 percent from a year ago in March. Chances of a fourth rate increase in December have risen above 40 percent, according to a US financial firm.

Higher yields could pressure equities, as they lessen investors’ risk appetite for riskier assets, such as stocks.

Investors Await Earnings Results from Tech Giants This Week

Investors are also anticipating a new batch of corporate earnings reports from major tech groups this week.

More than 180 firms listed in the S&P 500 are set to present their figures this week, including Amazon.com Inc., Alphabet Inc., Facebook Inc., Twitter Inc., Microsoft Corp., Boeing Co., and Chevron Corp.

Alphabet will be the first to reveal key results after market close on Monday, while Amazon, Facebook, Twitter, and Microsoft will report later in the week.

Head of research and strategy Tom Lee said there is an 83 percent chance that companies’ profits will surpass estimates, the best percentage in more than two years.

A strong earnings season for tech stocks, will also likely be necessary for the US and global markets to maintain their current gains.

The sector faces growing pressure over concerns about data use by social media firms, as well as signs that demand for smartphone devices may be declining as the so-called supercycle for the semiconductor industry reaches its end.

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