Nasdaq will return as technology stocks gain ground

(Reuters) – Major US stock indices were heading for a higher opening on Tuesday, with the Nasdaq returning after a sharp sell-off in the previous session as US bond yields fell and investors gained shares of the defeated technology.

Tesla Inc. advanced by about 6%, while Apple Inc., Amazon.com Inc., Facebook Inc. and Microsoft Corp. grew by about 2% each on early trading.

Signs that a $ 1.9 trillion coronavirus rescue package was closing after final approval triggered an increase in yields on Monday, pushing the technically strong Nasdaq to stop more than 10% below the maximum level of closing on February 12, which confirmed a correction.

US 10-year treasury bond yields fell to 1.54% after hitting near 13-month highs of 1.613% in the previous session. Longer yields have risen in the past month, as investors have seen a faster-than-expected economic recovery and higher inflation.

Higher yields can weigh even more on technology stocks and growth with high valuations, as they threaten to erode the value of longer-term cash flows.

“Technical stocks are waiting for some sort of rebound after the fall they have had so far, with most investors maintaining a positive outlook on medium- and longer-term technology stocks,” said Michael Sheldon, investment director at RDM Financial from Westport, Connecticut.

“The potential wind for the market is if interest rates rise more from this point in the short term … because they have risen too fast in too little time.”

At 8:17 am ET, the Dow E-minis rose 110 points, or 0.35%, the S&P 500 E-minis rose 35.75 points, or 0.93%, and the Nasdaq 100 E-minis rose by 273.5 points, or 2.22%.

Rising yields accelerated a turnaround from “home” winners to stocks ready for an economic reopening, helping the Dow hit a record high on Monday.

The global economic outlook has risen as vaccine launches gain speed and the United States is launching a new package of incentives, the Organization for Economic Co-operation and Development said, making the political forum’s forecasts.

Major U.S. lenders, including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs, fell about 1 percent a day after the bank’s index rose to a new 14-year high.

GameStop rose 11% to $ 215.95, rising Monday by more than 40 percent of the video retailer’s e-commerce strategy and speculation that small investors will pour stimulus controls into markets.