Futures fall as rising yield, China services activity data weigh

U.S. stock index futures fell on Tuesday as higher Treasury yields weighed on major growth stocks, while downbeat data on services activity in China stoked worries over demand in the world’s second largest economy.

Yield on the 10-year Treasury notes climbed to 4.21% ahead of more economic data and the U.S. Federal Reserve’s policy meeting later this month.

Major technology-linked stocks such as Apple (AAPL.O), Nvidia (NVDA.O), Meta Platforms (META.O) and Netflix (NFLX.O) lost between 0.5% and 1.0% before the bell.

With September trading kicking into full gear, a cautious trading session is likely with yields pressuring stocks, according to Peter Cardillo, chief market economist at Spartan Capital Securities.

China’s services activity expanded at the slowest pace in eight months in August, a private-sector survey showed, as weak demand continued to dog the world’s second-largest economy and stimulus failed to meaningfully revive consumption.

U.S.-listed shares of Chinese companies including PDD Holdings (PDD.O), JD.com , Baidu and Alibaba fell between 0.9% and 1.6%.

U.S. economic data since the Fed’s July meeting has added to the impression the economy is cooling without cracking, likely bolstering the case against further interest rate increases.

All three main U.S. stock indexes logged gains in the previous week after a raft of data pointed to a softening labor market.

Traders’ bets that the Fed will leave rates unchanged in the next policy meeting stood at 93%, while pricing in a near 59% chance of a pause in November, up from 52% a week ago, according to the CME FedWatch tool.

Meanwhile, Goldman Sachs (GS.N) lowered the chances of a U.S recession in the next 12 months to 15% from 20% amid continued easing inflation and labor market data.

Investors now await factory orders data for July due at 10 a.m. ET.

At 7:10 a.m. ET, Dow e-minis were down 31 points, or 0.09%, S&P 500 e-minis were down 9.75 points, or 0.22%, and Nasdaq 100 e-minis were down 61 points, or 0.39%.

Shares of Airbnb (ABNB.O) and Blackstone (BX.N) added 5.8% and 4.2%, respectively, in premarket trading as the companies were set to join the S&P 500 index.

Oracle gained 1.5% after Barclays upgraded the software firm to “overweight” from “equal weight”.

Next week, focus will be on the consumer price index data, which could offer clues on inflationary pressures in August. The Fed’s next policy meeting is on Sept. 20.