U.S. stock indexes edged higher in premarket trading following Monday’s sell-off, which was driven by rising bond yields.
On Monday, all three major indexes closed down by around 1%, as a spike in Treasury yields pressured stocks due to expectations that the Federal Reserve will slow the pace of interest rate cuts.
Today, U.S. Treasury yields have slightly retreated, although the yield on the 10-year benchmark note remains above 4%.
Bond yields, which serve as a proxy for government borrowing costs, rose after strong job figures last week signalled the American economy’s resilience.
Traders now see a 90% chance of the Fed cutting the rate by a Quarter Point next month, a shift from last week, when a larger half-point reduction was considered 40% likely.
Fed Governor Adriana Kugler expressed support for further rate cuts if inflation continues to ease, as she expects.
Ahead of the opening bell, the Dow Jones Industrial Average was up 0.1%, the S&P 500 rose 0.3%, and the Nasdaq 100 gained 0.4%.
