U.S. stock futures were unable to find direction Wednesday morning following a two-day selloff in tech shares. This was due to rising rates that boosted financial stocks and energy.
Futures on Dow Jones Industrial Average fell 26 points. S&P 500 futures remained below the flatline, while Nasdaq 100 futures remained in moderately positive territory.
Extended trading saw retail stocks take a blow after quarterly results. Gap dropped around 16% and Nordstrom fell 23% respectively. Both companies reported earnings missed for the last quarter.
After-hours gains of more 7% were attributed to higher earnings and guidance for the first quarter.
However, the majority of tech stocks were trading in the red during regular trading. Tech-heavy Nasdaq Composite lost 0.5% in Tuesday’s session. The S&P500 gained 0.17%, and bank and energy stock helped push the Dow Jones Industrial Average 194 higher.
The sector divergence was accompanied by Treasury yields which tend to boost bank stocks and crush tech companies and other high-growth businesses. Since Monday’s renumining of Jerome Powell, President Joe Biden has seen yields rise.
Rob Haworth, senior investment strategist at U.S. Bank Wealth Management said that “it’s certainly a tale of more rotation.” “The market now believes that the Powell renomination is a reopening story. This puts aside any concerns or risks we may have about rising Covid infection rate rates.
Investors were scared by the resurgence in Covid-19 in Europe on Friday, just before Powell’s renomination announcement. This pushed tech shares higher.
Trading may slow down in the days ahead due to Thanksgiving holiday. However, investors will be keeping an eye on a variety of economic data due Wednesday including weekly unemployment claims, GDP updates, personal income, consumer confidence readings, and Federal Reserve FOMC minutes.
Most companies, but not all, have reported financial results for the third trimester. Deere will report before the bell on Wednesday.