US pre-open: Stocks to rebound as bond yields ease

(Sharecast News) - A drop in bond yields was triggering a rise on stock futures on Wednesday as markets attempted to rebound after heavy falls the previous session. The Dow Jones Industrial Average and S&P 500 were both rising 0.4% in pre-market trade, while the Nasdaq added 0.5%.

The three indices dropped 1.1%, 1.5% and 1.6% on Tuesday as the rising possibility of a government shutdown dampened risk appetite, while bond yields set fresh 16-year highs.

The yield on a 10-year US Treasury was pulling back 3.1 basis points to 4.509% on Wednesday after hitting a high of 4.54% the previous session.

Meanwhile, the US dollar index was rising for a fifth straight day, back at levels not seen since late last year, while the CBOE VIX index (a key gauge for volatility) rose to a four-month high.

"Fears of a partial US government shutdown have also been driving USD higher on safe-haven flows," said Manoj Ladwa, director at ARJ Capital. "A budgetary stand-off between Democrats and Republicans is raising the risks of a funding deal being agreed ahead of the next October 1st deadline. Just months after the last narrowly avoided budget crisis, the tense atmosphere looks likely to keep USD supported for now."

Durable goods orders for August were the only major economic data release of Wednesday's session, due out at 0830 ET. The figures are expected to show a 0.5% decline in orders for the month, after a significant 5.2% drop in July.

In company news, entertainment stocks will be in focus once again with Hollywood writers set to return to work for the first time in five months, after the Writers Guild of America agreed a tentative deal with major studios, streaming services and networks. Disney, Paramount, AMC and Netflix were all rising in pre-market deals.