U.S. stock-index futures pointed to a sharply lower start for U.S. equities Thursday as yields on government bonds extended their decline with investors shying away from bets on a blistering economic recovery and rising inflation.

What are major indexes doing?

Futures on the Dow Jones Industrial Average

dropped 445 points, or 1.3%, to 34,123.

S&P 500 futures

declined 54.95 points, or 1.3%, to 4,294.75.

Nasdaq-100 futures

were down 193.75 points, or 1.3%, at 14,608.50.

On Wednesday, stocks edged higher, with the S&P 500

rising 0.3% and the Nasdaq Composite

eking out a gain of just over 1 point — enough to lift both indexes to record finishes. The Dow

rose 104.42 points, or 0.3%, to end at 34,681.79.

What’s driving the market?

U.S. stock benchmarks were on track to retreat after the latest in a string of all-time highs, with a weaker tone Thursday across global equities attributed in part to worries that the recovery from the COVID-19 pandemic could be slowed by persistent supply bottlenecks and the spread of the delta variant of the coronavirus that causes COVID-19.

A sharp drop in the yield on the 10-year Treasury note

remains front and center. The 10-year yield dropped 7 basis points to trade below 1.25% at its session low, its lowest since February.

Analysts have scrambled to explain the Treasury rally, which has taken the 10-year yield from above 1.40% at the beginning of the month, with explanations ranging from a loss of faith in the economic recovery to global appetite for yield to technical factors that have seen a flush out of speculative bets on rising yields.

“The overriding concern being reflected in the bond market is that peak growth has been reached, and the benefits from fiscal policy are starting to fade. Recent data has been disappointing. The Citigroup Economic Surprise Index is at its lowest level since February,” said Sophie Griffiths, analyst at Oanda, in a note.

Read: Why is the 10-year Treasury yield plunging to the lowest since February? Government debt is Wall Street’s new meme asset, says investor

Analysts said concerns over the delta variant were also weighing on sentiment. Japan on Thursday was set to place Tokyo under a state of emergency that would continue through the Olympics, underlining fears a COVID-19 surge will multiply during the Games.

On Wednesday minutes of the Federal Reserve’s June policy meeting confirmed that policy makers began discussing when it would be appropriate to consider the slowdown of monthly bond purchases. It also showed that policy makers largely thought conditions needed to warrant a tapering had yet to be achieved.

On the U.S. economic front, weekly data on claims for unemployment benefits are due at 8:30 a.m. Eastern. Economists surveyed by The Wall Street Journal expect first-time applications to fall to 350,000 in the week ended July 3 from 364,000 a week earlier. Data on consumer credit for May is due at 3 p.m.

Which companies are in focus?

Electric car maker Tesla Inc.

on Thursday unveiled the Standard Range (SR) Model Y on its China website, with a starting price of ¥276,000 ($42,589), which takes into account government subsidies and reduces it from ¥291,840. Delivery of the autos will begin in August, according to the website. Tesla shares were down more than 2% in premarket trade.

Shares of WD-40 Co.

rose after the maintenance and cleaning products company delivered results and an outlook late Wednesday that beat Wall Street expectations.

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