U.S. stock futures rose and government bond yields fell following a recent climb, potentially easing some pressure on technology shares.
Futures for the S&P 500 added 0.7% Wednesday. The broad-market index rose Tuesday as investors snapped up shares of companies across industries. Contracts for the tech-focused Nasdaq-100 gained almost 1% and futures for the Dow Jones Industrial Average rose 0.5% Wednesday.
Shares of Netflix added 1.6% premarket, while Alphabet gained 1.2% as bond yields ticked lower. Technology companies tend to benefit from low yields as some investors will pay more for shares that they expect to churn out outsize profits in the future. This reverses when yields rise. Meanwhile,Peloton Interactiveshares rose 4.7% premarket, set to add to a Tuesday’s 25% jump, after the company replaced its chief executive and cut 2,800 jobs.
In bond markets, the yield on the benchmark 10-year Treasury note ticked down to 1.923% Wednesday from 1.954% Tuesday, its highest closing level since July 2019. Yields move inversely to prices and have been rising amid expectations for Federal Reserve interest-rate increases.
Earnings are due ahead of the market open from CVS Health,CME GroupandYum! Brands.Uber TechnologiesandWalt Disney are slated to post quarterly results after the market close.
In premarket trading, shares of Lyft fell 3.9% after the ride-hailing company said revenue increased 70% in the fourth quarter, as longer trips and higher fares offset weaker-than-expected ridership numbers. Chipotle Mexican Grill shares rose 6.6% after it said it increased menu prices again and is likely to raise them further this year.
Investors are monitoring a number of factors that could affect earnings, including an anticipated increase in interest rates this year,elevated inflation and supply-chain disruptions. As of late last week, 34 companies in the S&P 500 had given earnings guidance for the first quarter that was lower than analysts had been expecting, while 13 companies had issued guidance higher than the average earnings estimate, according to FactSet.
Fresh inflation data due Thursday is expected to give investors additional clues as to how much and how quickly the Fed may raise rates, having slashed them in 2020 to cushion the economy from the impact of Covid-19. The prospect of higher borrowing costs globally has heightened volatility in stocks this year, particularly technology ones that tend to benefit from a low-rate environment.
“All market participants are now trying to gather more information on how this global turnaround of central banks will happen,” said Carsten Brzeski, ING Groep’s global head of macro research. “There’s a question of how stock markets will adjust to this new normal.”
Overseas, the pan-continental Stoxx Europe 600 jumped 1.5%. Shares of Dutch payment company Adyen jumped 8.6% after it reported a rise in net profit that beat market expectations.
The Russian ruble rose almost 0.4% against the dollar. French President Emmanuel Macron shuttled from Moscow to Kyiv on Tuesday in an attempt to avert conflict between Ukraine and Russia. Some investors hope that ongoing communication will reduce the chances of tensions escalating, Mr. Brzeski said.
In Asia, major stock indexes closed with gains. Hong Kong’s Hang Seng jumped 2.1% and Japan’s Nikkei 225 added 1.1%. China’s Shanghai Composite and South Korea’s Kospi gained 0.8% each.