Stock Futures Rise, Pointing to Tech's Rebound
09 March 2021 - 10:27AM
Dow Jones News
By Caitlin Ostroff
U.S. stock futures rallied Tuesday as a recent selloff in
government bonds paused and giant technology stocks recovered some
ground.
Futures tied to the S&P 500 gained over 1%, suggesting that
the broad market benchmark may climb after the New York opening
bell. Dow Jones Industrial Average futures edged 0.4% higher. The
blue-chips index notched a new intraday record on Monday.
Futures linked to the Nasdaq-100 rallied 1.8% Tuesday,
indicating that technology shares are likely to rebound. The
tech-heavy index and the broader Nasdaq Composite Index both fell
into correction territory Monday, meaning that the gauges have
declined more than 10% from recent highs.
Technology shares have come under pressure in recent weeks as a
wave of selling in the bond market lifted Treasury yields. That led
investors to question the high valuations that the technology
sector is trading at following its steep climb in 2020.
The yield on the 10-year Treasurys ticked lower to 1.542% on
Tuesday. It had ended the previous day at 1.594%, its highest level
in over a year.
The stabilization in bond markets is likely to help technology
shares recoup some of their losses, investors said. Money managers
expect many companies in the sector to continue to benefit from
increased online shopping and at-home access to media,
entertainment and computing options even as Covid-19 lockdowns
ease.
"It is this buy-the-dip mentality," said Daniel Morris, chief
market strategist at BNP Paribas Asset Management. "It's not like
we've changed our long-term view on tech. Everyone expects it to do
well -- it was just really expensive."
U.S. lawmakers are on track to pass the latest version of the
$1.9 trillion coronavirus stimulus package later this week. That
has boosted investors' confidence in the economy's prospects and
bolstered demand for stocks in companies that are likely to benefit
from the economic rebound, such as banks and energy producers.
This rotation sent the Dow -- which is weighted more heavily
toward cyclical sectors -- to notch its second highest close in
history Monday.
Some investors now expect that bond markets could calm as
appetite for U.S. government debt revives following the sharp rise
in yields. The 10-year Treasury yield was as low as 0.915% near the
start of the year.
"We think a big part of the bond-yield move has played out,"
said Hani Redha, a portfolio manager at PineBridge Investments. "At
this level of yields, we do expect additional buyers to come in.
That tends to stabilize the yield level."
Overseas, the pan-continental Stoxx Europe 600 ticked up
0.4%.
In Asia, most major indexes were mixed by the close of trading.
The Shanghai Composite dropped 1.8% and South Korea's Kospi
declined 0.7%. Japan's Nikkei 225 advanced 1%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
March 09, 2021 05:12 ET (10:12 GMT)
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