U.S. stock futures fall as 10-year Treasury yield hits 5%

How stock futures are trading

• S&P 500 futures
  ES00,
  -0.57%
  fell 12.25 points or 0.3%, to 4,236.75

• Dow Jones Industrial Average futures
  YM00,
  -0.57%
  dropped 115 points, or 0.3%, to 33,143

• Nasdaq-100 futures
  NQ00,
  -0.65%
  fell 63 basis points, or 0.4%, to 14,598

On Friday, The Dow Jones Industrial Average 
DJIA
fell 286.89 points, or 0.9%, to close at 33,127.28.The S&P 500 
SPX
shed 53.84 points, or 1.3%, to finish at 4,224.16. The Nasdaq Composite 
COMP
dropped 202.37 points, or 1.5%, to end at 12,983.81.

What’s driving markets

The 10-year yield
BX:TMUBMUSD10Y
jumped 9 basis points to hit the crucial 5% level on Monday. The 10-year yield finished last week with the biggest weekly rise since April, climbing to near the psychologically important level of 5% as Middle East tensions drove some haven purchases.

Last week saw all three major benchmarks record their largest percentage drops since the week ended Sept. 22, with the Nasdaq sinking 3.2% and the S&P 500 dropping 2.4%, pressured by the bond yield climb and worries about an expanding Israel-Hamas war.

Two Israeli hostages were released over the weekend and some initial aid got through to Gaza, with signs a ground invasion by Israel has been delayed. Oil prices
CL.1,
-0.06%

BRN00,
+0.08%
were flat.

Read: Stock-market investors face reality of 5% Treasury yields. Here’s what’s next.

Rising yields have also surrounded worries that another interest rate hike is en route, following comments from Chairman Jerome Powell last week. The data calendar is empty for Monday, but the week will bring updates on the housing market, growth, but also the Fed’s preferred inflation gauge, the personal consumption expenditures price index, due Friday.

On the earnings front, an important batch of results are rolling out this week that could determine the course of the remaining third-quarter earnings season, with Microsoft Corp.
MSFT,
-1.40%
and Google parent Alphabet Inc.
GOOGL,
-1.56%
reporting Tuesday, Meta Platforms Inc.
META,
-1.33%
reporting Wednesday and Amazon.com Inc.
AMZN,
-2.52%
on Thursday. Market optimism has wavered followed mixed bank earnings.

Read: Big-tech results will decide ‘where we go from here’ amid investor caution. They would fall if it weren’t for this one company

And then there are the technical factors for investors to fret about, with the S&P 500 closing below the 200-day moving average, seen by many Wall Street chartists as the dividing line between longer-term uptrends and downtrends. 

“The index is now just 1% away from falling below the bull boundary around 4,190,” Michael Kramer, found of Mott Capital Management, told clients in a note. He said the next stop for the index could be 4,183.