Nasdaq Futures Fall 1.2% as Treasury Yields Hit Highest Since 2007

Futures contracts on American exchanges pulled back on Thursday, September 24, with technology leading the losses. Nasdaq-100 futures fell 1.20%, to 30,397 points; S&P 500 futures dropped 0.69%, to 7,718.75 points; and Dow futures lost 0.44%, to 51,646 points.

Yields at their highest since 2007

The pressure came from interest rates. The 10-year Treasury yield hit 5.140%, the highest since July 2007. The 2-year yield reached 4.897%, a high since 2023, and the 30-year yield hit 5.438%, the highest since 2004. Strong activity data and higher fuel and shipping costs reignited inflation fears.

With that, the odds of another Fed rate hike in October jumped from about 49% to over 75% in a week. The central bank had already raised the rate to a range of 3.75% to 4%, the first increase since 2023.

Why higher rates hit technology harder

A stock's price largely reflects the present value of the profits the company is expected to generate in the future. When U.S. Treasury yields rise, that discount gets bigger, and distant profits are worth less today. Technology companies with high valuations depend more on profits expected many years out, which is why they tend to feel the impact of rising rates more than sectors with more immediate profit.

There's also a comparison effect: with a government bond paying over 5% a year, some investors start demanding a higher return from stocks to keep taking on stock-market risk.

Reaction outside the United States

The bad mood spread: China's CSI 300 fell 1.73%, Australia's ASX 200 dropped 0.66%, and Europe's Stoxx 600 opened lower. Japan's Nikkei was the exception, up 1.66%.

What the chart showed afterward

The chart shows the Nasdaq Composite index, which includes all stocks listed on the Nasdaq and isn't the same as the Nasdaq-100 futures contracts mentioned above, but tends to move in the same direction. In the September 24 session, the index opened at 26,734.51 points, 0.75% below the previous close (26,936.04), and hit 26,706.14 points at the day's low. The drop didn't hold: the index closed at 26,939.37 points, essentially flat.

The 10-year yield, measured by the ^TNX index, closed September 24 at 5.162% and kept climbing, up to 5.311% at the October 5 close. Even so, the Nasdaq Composite closed October 7 at 27,538.69 points, 2.22% above the September 24 close, after marking the period's high, 27,722.75 points, on October 6. Between June and October, the low had been 24,425.34 points, on July 29.

The episode shows that the drop in futures before the open didn't determine the day's close, and that rising rates didn't stop the index from rising in the following weeks. This describes what happened in that period, not a rule for what comes next.

What to watch

The next steps depend on the Fed's October decision and inflation data. For anyone following indices and technology stocks, the 10-year yield and the economic calendar remain direct references for understanding the sector's volatility.

Source: Traders Union.

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