US futures contracts rose on Tuesday as a recent sell-off of government bonds and giant tech stocks recovered slightly.
Futures linked to the S&P 500 rose more than 1%, indicating that the broad market benchmark could climb after the opening clock in New York. The Dow Jones industrial average rose 0.4% higher. The blue-chips index hit a new intraday record on Monday.
Futures linked to the Nasdaq-100 rose 1.8% on Tuesday, suggesting that technology stocks are likely to recover. The technically-heavy index and the broader Nasdaq composite index both fell in the correction area on Monday, meaning the meters have declined by more than 10% from recent highs.
Technology stocks have come under pressure over the past few weeks as sales in the bond market have increased Treasury yields. This has led investors to question the high valuations with which the technology sector trades after the steep rise in 2020.
Yields on the 10-year Treasurys rose lower to 1.542% on Tuesday. It ended the previous day at 1.594%, the highest level in more than a year.
The stabilization in bond markets is likely to help technology stocks recover from their losses, investors said. Money executives expect many businesses in the sector to continue to benefit from increased online shopping and home access to media, entertainment and computer options, even if the closure of Covid-19 is facilitated.
“It’s this buy-the-dip mentality,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “It’s not like we’ve changed our view on technology in the long run. Everyone expects it to do well – it was just very expensive. ”
U.S. lawmakers are on track to pass the latest version of the $ 1.9 billion coronavirus stimulus package later this week. It has boosted investor confidence in the outlook for the economy and boosted demand for shares in companies likely to benefit from the economic recovery, such as banks and energy producers.
This rotation sent the Dow, which weighed heavier on cyclical sectors, to reach its second highest close in history on Monday.
Some investors now expect the bond markets to calm down as the appetite for US sovereign debt revives after the sharp rise in yields. The tenure return for ten years was close to the beginning of the year to 0.915%.
“We think a lot of the bond yield movement has taken place,” said Hani Redha, a portfolio manager at PineBridge Investments. “At this level of yields, we expect additional buyers to come in. It tends to stabilize the yield level.”
Overseas, the pan-continental Stoxx Europe 600 rose 0.4%.
In Asia, most major indices were mixed by the close of trading. The Shanghai composition fell by 1.8% and Kospi in South Korea fell by 0.7%. The Japanese Nikkei 225 rose 1%.
The New York Stock Exchange Monday.
Photo:
Lev Radin / Zuma Press
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