US futures rose on Tuesday as government bonds were recently cut, and technology giant stocks regained some ground.
S&P 500 futures gained more than 1%, suggesting that the market benchmark could rise after the opening bell in New York. Dow Jones Industrial Average futures rose 0.4% more. The blue-chips index set a new intraday record on Monday.
Nasdaq-100 futures rallied 1.8% on Tuesday, indicating that technology stocks are likely to return. The Nasdaq Composite technology index and broader index fell in the correction territory on Monday, which means that the measurements fell by more than 10% compared to the latest highs.
Technology stocks have come under pressure in recent weeks as a wave of bond market sales has boosted Treasury yields. This has led investors to question the high valuations at which the technology sector trades after the steep climb of 2020.
The 10-year yield on Treasurys ticked on Tuesday, to 1.542%, on Tuesday. It had closed the previous day at 1,594%, the highest level in the last year.
Stabilization in bond markets is likely to help technology stocks recover some of their losses, investors said. Money managers expect many companies in the industry to continue to benefit from increased online shopping and home access to media, entertainment and computing options, even as Covid-19 blockages ease.
“It’s this buying mindset,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “We do not seem to have changed our long-term view of technology. Everyone expects it to work well – it was very expensive. ”
U.S. lawmakers are on track to pass the latest version of the $ 1.9 trillion coronavirus stimulus package later this week. This has increased investor confidence in the outlook for the economy and strengthened demand for shares in companies that could benefit from the economic recovery, such as banks and energy producers.
This rotation sent the Dow – which is more weighted towards cyclical sectors – to reach the second largest close in history on Monday.
Some investors now expect bond markets to calm as the appetite for US government debt returns after a sharp rise in yields. The 10-year treasury yield was up 0.015% near the beginning of the year.
“We believe that much of the bond yield has been played out,” said Hani Redha, portfolio manager at PineBridge Investments. “At this level of yields, we expect additional buyers to come. This tends to stabilize the level of yield.”
Abroad, the pan-continental Stoxx Europe 600 rose 0.4%.
In Asia, most major indices were mixed with the closing of transactions. Shanghai Composite fell 1.8% and Kospi in South Korea fell 0.7%. The Japanese Nikkei 225 advanced 1%.
New York Stock Exchange on Monday.
Photo:
Lev Radin / Zuma Press
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