Futures Fall As Apple Drops Production Increase, Falling Yields Limit Losses

U.S. stock index futures fell on Wednesday led by Apple after it dropped plans to boost production of its new iPhones, but a pullback in benchmark Treasury yields from multi-year highs limited the decline.

Shares of the world's most valuable public company fell 3.7% in premarket trading after Bloomberg reported Apple had told suppliers to curtail efforts to increase assembly of its iPhone 14 product family by as many as 6 million units in the second half of this year.

"Apple has got so many pieces and any weakness in Apple demand has big knock-on impacts on many spaces, so chips, processing and the outlook for retail sales even," said Patrick Armstrong, chief investment officer at Plurimi Wealth.

The report on Apple's production cut added fuel to investors worried about the U.S. Federal Reserve's push to aggressively increase borrowing costs to tame stubbornly high inflation even at the risk of slowing down economic growth.

Other megacap growth names such as Amazon.com Inc, Microsoft Corp, Meta Platforms Inc and Tesla Inc also fell between 0.6% and 2.1%.

Chipmakers Advanced Micro Devices, Qualcomm Inc Nvidia Corp and Micron Tech were down between 1.5% and 2.8%.

Still, a bit of relief for equity markets came from a Bank of England decision to buy as many long-dated government bonds as needed between now and Oct. 14.

The yield on the U.S. 10-year Treasury bill came off 12-year highs to hit the day's low of 3.886%, while Germany's 10-year government bond yield, the benchmark for the euro zone, fell after touching a 11-year high. [US/] [GVD/EUR]

"Yields now are approaching the Fed's desired target level of 4 and 4.5%. So once that happens, we should see yields beginning to level off and that should boost equity prices," said Peter Cardillo, chief market economist, Spartan Capital Securities LLC.

"The market is very, very sold."

At 7:30 a.m. ET, Dow e-minis were down 85 points, or 0.29%, S&P 500 e-minis were down 18.75 points, or 0.51%, and Nasdaq 100 e-minis were down 113.75 points, or 1%.

In the previous session, Wall Street's main indexes sank deeper into a bear market, with the S&P 500 recording its lowest close in almost two years on rate hike worries.

Bucking the overall slide, Biogen surged 45.9% after its Alzheimer's drug, developed with Japanese partner Eisai, succeeded in slowing cognitive decline.

Shares of Eli Lilly & Co, which is also developing an Alzheimer's drug, rose 7.7%.