U.S. stock futures are higher on Wednesday as equities continue their rebound from a one-day rout to start the week.
Dow Jones Industrial average futures rose by 184 points, or 0.5%. S&P 500 futures gained 0.4%. Nasdaq 100 futures traded slightly into the green.
The Dow tumbled by 725 points on Monday for its worst session in 8 months. It then rallied nearly 550 points on Tuesday. Futures are indicating a continuation of that rebound as investors again step in to buy the dip.
The bond market — specifically the 10-year Treasury yield — is driving the volatility in the equity markets. On Wednesday, the 10-year yield was bouncing, up 4 basis points to 1.25% (1 basis point equals 0.01%). The yield dropped to a new 5-month low on Monday, before stabilizing on Tuesday. The drop in rates is unnerving equity investors by signaling a possible slowing economy due to spreading Covid variants or a possible Federal Reserve mistake.
Stocks that would benefit most from a continued swift economic reopening were set to bounce again on Wednesday after rebounding from the Monday sell-off in the prior session. Shares of Carnival were up nearly 3%. Las Vegas Sands was up 2%.
Energy stocks were higher as oil continued to rebound after falling below $70 a barrel on Monday.
Dow member Johnson & Johnson gave a boost to sentiment after the drugmaker reported better than expected second-quarter earnings and revenue and also raised its 2021 guidance. The shares gained about 1% in premarket trading.
Shares of Chipotle rose 5% in premarket trading trading as the Mexican fast-food chain reported quarterly revenue that surpassed pre-pandemic levels as dine-in customers returned to its restaurants.
Netflix reported disappointing third quarter subscriber guidance after the bell on Tuesday. The streaming giant said it expects 3.5 million net subscribers in the third quarter, nearly 2 million below analysts’ estimates. The company also reported earnings that missed expectations.
Netflix shares were last little changed in premarket trading.
On Tuesday, reopening stocks rebounded sharply from Monday’s sell-off triggered by a Covid-inspired global growth scare. American Airlines rose 8.4% and Norwegian Cruise Line rose 8.3%.
Some strategists see the market heading into a volatile period, in which there could be a deeper pullback. Investors are juggling inflation concerns as well as new Covid cases are rebounding in the U.S. as the delta variant spreads.
“I think what we’ve seen here are the early warning shots of a correction that we’ll see probably… in late August, September, October,” said Matt Maley, equity strategist at Miller Tabak.
Earnings season continues on Wednesday with key reporting from Coca-Cola, Johnson & Johnson, Verizon, CSX, Las Vegas Sands and Texas Instruments. About 85% of S&P 500 companies that have reported so far have beaten estimates, according to FactSet.
— with reporting from CNBC’s Patti Domm.
