U.S. stock futures were flat in overnight trading on Tuesday after the Dow Jones Industrial Average slipped from its record level amid fears about rising interest rates.
Dow futures rose just 12 points. S&P 500 and Nasdaq 100 futures also hovered around the flatline.
The major averages were pressured Tuesday by rising interest rates, as the U.S. 10-year Treasury yield notched a 14-month high of 1.77%. Bond yields have been on the rise this year amid a strong Covid-19 vaccine rollout and expectations of a broad economic recover.
The Dow Jones Industrial Average lost more than 100 points, falling from a record high reached on Monday. The S&P 500 fell about 0.3%.
The Nasdaq Composite dipped about 0.1% as Facebook, Amazon, Apple, Netflix and Microsoft declined. Big Tech stocks are especially sensitive to rising rates as they depend on borrowing money cheaply to invest in their future growth.
Reopening plays like airlines and cruise lines popped on Tuesday after consumer confidence data topped expectations.
“Stocks began the day trading lower wondering if the Archegos fiasco was just a one-off event or a contagion. Selling pressure intensified because bond yields broke to new highs for the year again pounding technology stocks,” said Jim Paulsen, chief investment strategist at the Leuthold Group.
“However, discussions surrounding yet another forthcoming stimulus bill and a surge in consumer confidence reminded investors that the world economy is experiencing an incredibly strong economic recovery giving cyclicals, small cap stocks, and most international markets a revival bounce today,” Paulsen added.
Investors are awaiting details on President Joe Biden’s infrastructure plan on Wednesday. The spending package could cost more than of $3 trillion.
Private payroll data from ADP will be released at 9:15 a.m. on Wednesday morning. Economists polled by Dow Jones are expecting 525,000 private jobs were added in March, well above the 171,000 added in February.
ViacomCBS and Discovery recouped some of the major losses from the past few sessions after Archegos Capital Management was forced to liquidate its position in the media stocks. Some of the banks ensnared in the margin call last week rose on Tuesday.
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