U.S. stock markets on track for a lower open on Friday, set for their worst week in over six years. On Thursday, stocks fell another 4 percent, adding to the concerns that a deeper correction is in motion for Wall Street.
Since hitting record highs at the end of January, the Dow Jones Industrial Average and the benchmark S&P 500 index are both down over 10 percent. For the second time this week, the Dow plunged more than 1,000 points.
At 6:40 a.m. EST: Dow e-minis were down 32 points, or 0.13 percent, S&P 500 e-minis were up 3 points, or 0.12 percent, and Nasdaq 100 e-minis were up just 9.5 points, or 0.15 percent.
The chief cause of the pullback is a rise in U.S. bond yields because of growing expectations that a strong economy will result in higher inflation and an increase in interest rates this year.
The risk for traders is that the Federal Reserve, and other major central banks, are reining in the sizable supplies of cheap funds that were driven into the global economy since the financial crisis of 08-09. The yield on benchmark 10-year U.S. Treasuries, the driver of global borrowing costs, was lingering at 2.846 percent, close to Monday’s four-year high of 2.885 percent.
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The market’s gauge of volatility, the CBOE Volatility Index, opened at a relatively high of 32.18 on Friday. Although lower than the two-and-a-half-year high of 50.30 points hit on Tuesday, it is still triple than what it was just a week ago.
World stocks were also on track for their worst week since 2011, weighed down by a 4 percent drop in Chinese stocks.
Early on Friday, the U.S. House of Representatives approved a bill to fund the federal government through March 23 and to increase overall spending limits over two years.
With Wall Street’s quarterly results season passed the halfway mark, 78.3 percent of the S&P 500 companies have surpassed profit expectations, higher than the 72 percent beat rate of the last four quarters.