Wall Street Futures Steady After Treasury Yield Spike Triggers Sell-Off

US stock index futures were little changed early Thursday as investors weighed the previous session's sharp sell-off, which was triggered by a spike in Treasury yields.

The major averages fell sharply during Wednesday's regular trading session after Treasury yields climbed, reviving concerns among investors that the Federal Reserve may need to raise interest rates further to contain inflation.

Yields in focus

Rising Treasury yields tend to weigh on stocks by increasing borrowing costs for companies and making bonds more attractive relative to equities. The move higher in yields on Wednesday was steep enough to unsettle markets across sectors, contributing to the broad decline in the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite.

By early Thursday, futures tied to the three major indexes were trading close to flat, suggesting traders were pausing to assess the outlook for monetary policy rather than extending the previous day's losses.

Market participants are watching upcoming economic data and remarks from Federal Reserve officials for further signals on the path of interest rates. Additional rate increases would raise borrowing costs across the economy, from mortgages to corporate debt, and could further pressure equity valuations if yields continue to climb.

Trading is expected to remain sensitive to bond market moves in the sessions ahead as investors reassess expectations for Fed policy.