US stock index futures rose in overnight trading on Wednesday after the Dow closed at record levels during normal trading hours.
Futures contracts linked to the Dow Jones Industrial Average gained 90 points. S&P 500 futures gained 0.23% while Nasdaq 100 futures gained 0.18%.
The move comes after the Dow jumped 425 points to a record high in a volatile session in which the average of the 30 stocks fell more than 110 points. The S&P 500 was up 1.1% while the Nasdaq Composite was up 1%. At the start of the session, the tech-heavy index fell 1.3%.
Rising interest rates weighed on stocks at the beginning of the session as the 10-year US Treasury yield surpassed 1.4%, reaching its highest level since February 2020. Higher interest rates could encourage investors to switch from stocks to bonds. Higher rates could also hit the growth-oriented technology sector particularly hard.
“Our base case is that with rising growth and inflation expectations and eventually the Federal Reserve normalizing, interest rates will continue to rise,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe that if interest rates rise too high too quickly, the Fed will intervene to ensure that rising rates do not become too restrictive and disrupt stock markets or the real economy,” he said.
Yields fell from their highs after Federal Reserve Chairman Jerome Powell further downplayed the inflation threat.
“It seems pretty clear to us that interest rate developments have been driven by growing optimism about economic growth and interest rates are finally ‘catching up’ on optimistic growth prospects for equities,” said David Lefkowitz, head of Americas equities at UBS Global Asset Management. “So equity investors shouldn’t be unduly concerned.”
For the data, the first unemployment claims will be released on Thursday at 8:30 a.m. CET The economists polled by Dow Jones expect a pressure of 845,000. Also at 8:30 a.m.CET, the US Department of Commerce will publish its second estimate of GDP for the fourth quarter.
It will also be a busy day on the earnings side with a number of companies to release quarterly results. Best Buy, Papa John’s and Domino’s Pizza are among the names on deck before the opening bell. After market close, Salesforce.com, Beyond Meat, Etsy, and Caesars Entertainment are among the names reporting.
Newly listed companies such as Airbnb and DoorDash are also expected to show profits on Thursday after the closing bell.
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