U.S. stock index futures rose in Wednesday morning trading after the Dow Jones index closed at a record high during normal trading hours.
Futures contracts linked to the Dow Jones Industrial Average gained 60 points. S&P 500 futures were up 0.10%, while Nasdaq 100 futures were up 0.08%.
The move comes after the Dow Jones jumped 425 points to close at a record high in a volatile session that saw the average of 30 stocks drop more than 110 points. The S&P 500 advanced 1.1%, while the Nasdaq Composite appreciated 1%. At the start of the session, the high-tech index fell 1.3%.
Rate hikes weighed on equities at the start of the session, with the 10-year US Treasury yield reaching 1.4% and reaching its highest level since February 2020. Higher rates may encourage investors to change stocks for bonds. Higher rates can also hit the growth-oriented technology sector particularly hard.
“Our basic case is that rates will continue to rise due to rising growth and inflation expectations and, eventually, the normalization of the Federal Reserve,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe that if rates rise too quickly, the Fed will intervene to ensure that rate hikes do not become too restrictive and disturb the stock markets or the real economy,” he said.
Yields fell from their highs after Federal Reserve Chairman Jerome Powell continued to minimize the threat of inflation.
“It seems very clear to us that the movement in rates was driven by growing optimism about economic growth, and rates are finally ‘catching up’ with the prospect of optimistic stock growth,” said David Lefkowitz, head of equities for the Americas at UBS Global Wealth management. “Therefore, stock investors should not be overly concerned.”
Regarding the data, the initial numbers of unemployment benefits claims will be released at 8:30 am Eastern time on Thursday, with economists interviewed by Dow Jones expecting an impression of 845,000. Also at 8:30 am ET, the US Department of Commerce will release its second estimate for fourth quarter GDP.
It will also be a busy day in terms of profits, with several companies set to release quarterly results. Best Buy, Papa John’s and Domino’s Pizza are among the names on the deck before the opening bell. After the market closed, Salesforce.com, Beyond Meat, Etsy and Caesars Entertainment are among the names in the reports.
The new publicly traded companies, Airbnb and DoorDash, are also expected to report earnings on Thursday after closing.
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