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S&P 500 futures fall slightly following a big tech rally, Treasury rates and stimulus are in focus

S&P 500 futures were down slightly on Wednesday as traders kept their eyes on bond yields and stimulus progress in Washington.

S&P 500 futures were off by 0.2%. Futures on the Dow Jones Industrial Average added 55 points, or 0.2%. Nasdaq 100 futures dipped 0.6%.

The 10-year Treasury yield was slightly higher ahead of key inflation data ahead at 8:30 a.m. ET. The consumer price index is expected to show a moderate gain in inflation of 0.4% in February, or 0.1% when excluding food and energy, according to economists polled by Dow Jones.

Investors will also be watching Wednesday’s 10-year Treasury auction of $38 billion in notes at 1 p.m. ET for clues into the next direction for rates.

House Democrats are on track to pass the $1.9 trillion stimulus bill Wednesday morning. President Joe Biden is expected to sign the bill this weekend and checks of up to $1,400 should start going out this month. The anticipated stimulus and rise in rates has divided the market recently, largely favoring stocks leveraged to a recovering economy over the tech and growth stocks that led during the pandemic.

On Tuesday however, tech stocks snapped back. The Nasdaq Composite climbed 3.7% to post its best day since November as investors poured back into popular growth names. Tesla surged 19.6% for its biggest one-day pop since February 2020. Apple and Facebook popped more than 4% each, while Amazon rallied 3.8%. Before the snapback, the tech-heavy benchmark had fallen into correction territory on Monday, or down more than 10% from its recent high.

Tesla was 1% lower in premarket trading Wednesday. Apple was also slightly lower.

“Corrections … create natural inflection points for traders,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial. “Let’s not forget that less than a year ago traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today.”

The bounce in tech coincided with a decline in bond yields. The 10-year Treasury yield slid more than 5 basis points to 1.54% after trading as high as 1.62% on Monday.

The 10-year was at 1.56% early Wednesday.

Investors will monitor Wednesday’s inflation data to gauge if price pressures are running hot. Higher inflation expectations have been pushing bond yields higher, which put pressure on risk assets, especially high-growth tech stocks.

Read More: S&P 500 futures fall slightly following a big tech rally, Treasury rates and stimulus are in focus

2021-03-10 05:33:37

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