Stock futures rebound after worst Nasdaq day since March


Stock futures traded higher on Wednesday morning, recouping some of Tuesday’s losses as Treasury yields retreated from multi-month highs.

Nasdaq contracts gained around 0.7% before the opening bell. The index closed Tuesday’s regular session down 2.8%, posting its biggest drop since March. And the S&P 500 and the Dow Jones also fell sharply.

The decline in tech stocks came as Treasury yields rose rapidly, with rapidly rising borrowing costs putting pressure on the valuations of growth and tech stocks.

“A lot of Big Tech is overpriced,” said Teddy Parrish, CEO and CIO of Parrish Capital. Yahoo Finance Tuesday. “These valuations are going to have to come down a bit in a couple of ways: either they sell or earnings continue to rise and stocks are trading sideways. You can have a bit of both, but to look at some of these big tech companies that aren’t growing as fast as their P / E [price-to-earnings] multiples might involve, I think a lot of them are ahead of themselves. ”

The yield on the benchmark 10-year bond climbed to 1.56%, its highest level since June, before falling back to just over 1.5% on Wednesday morning. The 10-year yield has also increased significantly over a relatively short period of time, gaining more than 16 basis points from its low last Friday to its high on Tuesday.

Some strategists have suggested that Tuesday’s latest drop may not trigger a deeper drop or a formal correction in the very near term. Cyclical sectors, notably energy and industrials, have outperformed, supported by rising commodity prices as heightened inflation expectations have pushed up prices on everything from crude oil to cotton so far this week.

“I don’t think this is necessarily the start of a correction, but we have certainly seen rotational corrections throughout this year,” Art Hogan, chief market strategist at the National Securities Corporation, Tuesday’s market movements told Yahoo Finance. “It looks a lot more like a realignment. So obviously we have some weird machinations in the markets towards the end of the quarter and it’s knocking on the door tomorrow.”

“We certainly have enough worries in general about the future, whether it’s inflation or how sticky it is, the Fed cut. [and] what that might mean for profits… and certainly what’s going on in Washington and what they can and can’t accomplish this week, ”he added. “I think you lump it all together with the 10-year return that has increased quite significantly in a short period of time, and I really think it’s about the pace, not the ultimate level.”

In Washington, lawmakers are rushing to pass legislation to fund the government beyond the end of the fiscal year on Thursday. Republican lawmakers have been reluctant to tie a continued resolution to fund the government to a move to raise the debt ceiling until the end of 2022, putting lawmakers at a standstill ahead of Thursday night’s deadline to avoid a shutdown . This is also accompanied by ongoing debates around a $ 1,000 billion bipartite infrastructure agreement and a $ 3.5 trillion budget reconciliation plan, with key actions on each of them also due. take place later this week.

“It is really important to separate the closure, which is terrible, from the debt limit, which is catastrophic,” Jason Grumet, chairman of the Bipartisan Policy Center, told Yahoo Finance on Tuesday. “There could be, I think, a very short government shutdown Friday night before Saturday, Sunday. And I think you would then see a continued short resolution to get the government back on track.”

“The government shutdown is not really the problem we are grappling with,” he added. “The problem we’re grappling with is really the debt ceiling. The Democrats have tried to bring them together. It didn’t sell for the Republicans. Some Democrats take a different approach on the debt ceiling. But I’m not particularly concerned about a government shutting down. ”

7:24 a.m. ET Wednesday: Stock futures recoup some losses after Nasdaq’s worst day since March

Here’s where the markets were trading on Wednesday morning:

  • S&P 500 Futures Contracts (ES = F): +24 points (+ 0.55%), at 4,367.5

  • Dow Futures (YM = F): +165 points (+ 0.48%), at 34,340.00

  • Nasdaq Futures (NQ = F): +13.5 points (+ 0.09%) to 14,778.25

  • Raw (CL = F): $ -0.44 (-0.58%) to $ 74.85 per barrel

  • Gold (CG = F): + $ 6.30 (+ 0.36%) to $ 1,743.80 per ounce

  • 10-year cash flow (^ TNX): -2.3 bps for a yield of 1.513%

6:15 p.m. ET Tuesday: Stock futures are on the rise

Here are the main movements on the markets as of Tuesday evening:

  • S&P 500 Futures Contracts (ES = F): +7.5 points (+ 0.17%), at 4,351.00

  • Dow Futures (YM = F): +76 points (+ 0.22%), at 34,251.00

  • Nasdaq Futures (NQ = F): +13.5 points (+ 0.09%) to 14,778.25

Traders work in the trading floor of the New York Stock Exchange in New York, United States on August 19, 2021. The S&P 500 Index closed at 4,405.80 points, up 5.53 points, or 0.13%. The Dow Jones Industrial Average closed at 34,894.12 points, down 66.57 points, or 0.19%. The Nasdaq Composite Index closed at 14,541.79 points, up 15.88 points, or 0.11%. (Photo by Wang Ying / Xinhua via Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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