U.S. stock index futures rose on Wednesday after closing the Dow at a record high during normal trading hours.
Futures contracts linked to the Dow Jones Industrial Average gained 60 points. The S&P 500 futures rose 0.10%, while the Nasdaq 100 futures advanced 0.08%.
The move comes after the Dow jumped 425 points to close the record high in a volatile session that at one point saw an average of 30 shares fall by more than 110 points. The S&P 500 advanced 1.1%, while the Nasdaq Composite gained 1%. At the beginning of the session, the heavy technology index fell 1.3%.
The rise in rates affected stocks at the start of the session, as the 10-year yield on the US Treasury exceeded 1.4% and reached its highest level since February 2020. higher rates could encourage investors to abandon stocks and turn them into bonds. Higher rates could also especially affect the growth-oriented technology sector.
“Our bottom line is that rates will continue to rise due to rising inflation expectations and ultimately the normalization of the Federal Reserve,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe that if rates move too fast, the Fed will step in to make sure the rate hike doesn’t become too restrictive and disrupt equity markets or the real economy,” he said.
Yields fell from their highs after Federal Reserve Chairman Jerome Powell continued to downplay the threat of inflation.
“It seems pretty clear to us that the rate movement has been driven by growing optimism about economic growth, and that rates are finally ‘recovering’ the upward growth outlook for equities,” said David Lefkowitz, head of American Equities at UBS Global Wealth Management. “That way, equity investors shouldn’t worry excessively.”
As for the data, the initial numbers of unemployment claims will be released Thursday at 8:30 a.m. ET, and economists surveyed by Dow Jones expected an impression of 845,000. Also at 8:30 a.m. ET, the U.S. Department of Commerce will release its second fourth-quarter GDP estimate.
It will also be a busy day on profits with several companies posting quarterly results. Best Buy, Papa John’s and Domino’s Pizza are among the names on the deck before the opening bell. Following the market closure, Salesforce.com, Beyond Meat, Etsy and Caesars Entertainment are among the names that have reported.
New public companies Airbnb and DoorDash are also scheduled to report earnings Thursday after the closing bell.
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