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U.S. equity futures nudged higher in early Wednesday trading, thanks in part to steadying Treasury yields and some megacap tech gains, as investors looked to recoup some of yesterday’s selloff that was tied to surging inflation risks.
Stocks finished sharply lower on Tuesday, with the S&P 500 falling more than 66 points, or 1.1%, amid a notable mover higher in Treasury yields that followed stronger-than-expected jobs and activity data as well as a mixed auction of $39 billion in 10-year notes.
A big pullback for Nvidia (NVDA) , alongside declines in megacap names such as Apple (AAPL) and Tesla (TSLA) pulled the Nasdaq into a 378 point tailspin in a heavy-volume trading day that saw 20.5 billion shares change hands across all markets.
Treasury yields have remained the market’s focus this week following a series of moves that have underscored investors’ inflation concerns as well as the uncertainty tied to the new administration of President-elect Donald Trump.
Bond markets remain the key focus on Wall Street this week as 10-year Treasury yields touch the highest levels since April of last year.
Benchmark 10-year note yields hit a late-April high of 4.699% yesterday after the Labor Department posted a stronger-than-expected reading for November job openings and foreign buyers backed away from a second consecutive coupon auction from the Treasury.
The Atlanta Fed’s GDPNow tracker, meanwhile, upgraded its assessment of fourth quarter growth to 2.7% from 2.4%, adding further pressure on bond prices and paring bets on a spring Federal Reserve rate cut.
Related: Analyst resets bank stocks forecast ahead of earnings
On Wall Street, the inflation concerns, as well as the market’s broader uncertainty over tax, tariff and immigration policies from the White House, continue to linger into the Wednesday session.
Key stretch for markets
“With the next couple of weeks ushering in the first jobs report, inflation data, and earnings season of the year, we’re entering a stretch that could determine whether bulls regain their footing after the December dip,” said Daniel Skelly, head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.
“From a seasonal perspective, January has been more mixed in recent decades, with the S&P 500 positive for the month in only 10 of the past 20 years,” he added.
Heading into the start of the trading day, futures contracts tied to the S&P 500, however, suggest an opening bell gain of around 21 points, with ADP’s National Employment Report slated for 8:30 am Eastern time.
Related: Bonds hold the keys to what’s next for stocks
The Dow Jones Industrial Average, meanwhile, is priced for a 131 point advance while the Nasdaq is looking at a 92 point gain from last night’s close.
In other markets, global oil prices are trading at the highest levels in three months, with U.S. crude topping the $75 per barrel mark, following a surprise decline in OPEC production over the month of December and renewed demand tied to the resilient domestic economy.
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Overseas, Europe’s Stoxx 600 was marked 0.33% higher in Frankfurt, with the FTSE 100 gaining 0.21% in mid-day trading in London.
Overnight in Asia, the Nikkei 225 followed Wall Street lower with a 0.26% decline while the regional MSCI ex-Japan benchmark fell 0.57% into the close of trading.
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