U.S. stocks futures increased on Wednesday as the rapid rise in the 10-year Treasury yield eased. Notably, it led investors to buy some beaten-up tech stocks on the dip.
Futures on the Dow Jones Industrial Average surged 200 points or 0.6%. Meanwhile, S&P 500 futures increased 0.7%, while Nasdaq-100 futures recovered by 0.9%. In the previous session, the Nasdaq Composite witnessed its worst day since March amid a spike in bond yields.
However, on Wednesday, the 10-year Treasury Treasury yield declined by 3 basis points (0.03%) to trade just under 1.50%. The yield reached a high of 1.567% Tuesday.
Notably, tech stocks led Wednesday’s rout. Facebook, Microsoft, and Alphabet declined by more than 3%. Amazon dropped by more than 2%. Surging bond yields can affect growth stocks, including tech stocks as they lower the relative value of future earnings and can make the shares look overvalued.
But tech stocks were recovering in Wednesday’s premarket. Facebook, Amazon, Apple, and Alphabet were all up around 1%. Nvidia and Zoom Video were also recovering in the premarket.
In the previous session, the Nasdaq Composite fell 2.83% to settle at 14,546.68 for its worst day since March. The S&P 500 dropped 2.04%, and the Dow Jones Industrial Average lost 569.38 points or 1.63%.
Notably, the Dow and S&P are now down 3% for September. Meanwhile, the Nasdaq is down more than 4.5%.
Fed Chairman Jerome Powell says inflation could persist longer than anticipated
The pan-European STOXX 600 index declined by 2.2%, its biggest one-day fall in more than two months.
Additionally, MSCI’s gauge of stocks across the globe dipped 1.85%.
Notably, Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi Congress has until October 18 to raise or suspend the debt ceiling. Yellen said Failure to do so would have severe consequences for the economy. Moreover, JPMorgan Chase CEO Jamie Dimon announced the bank was prepping for the possibility of the U.S. hitting the debt limit.
Fed Chairman Jerome Powell announced Tuesday to the Senate Banking Committee that inflation could persist longer than anticipated due to supply chain issues and reopening pressures.
Shares of the semiconductor company Micron dropped by more than 3% in premarket trading after it reported earnings and revenue outlook for the first quarter of 2022. Remarkably, earnings and revenue outlook missed consensus estimates.
The market is now waiting for home sales data which is due on Wednesday.