U.S. stock futures jumped on Wednesday after a report showed tame inflation, easing worries about rising prices that has jolted yields higher and unnerved equity investors.
Futures on the Dow Jones Industrial Average gained 170 points, or 0.5%. S&P 500 futures added 0.4%. Futures on the tech-heavy Nasdaq 100 rebounded into the green, climbing 0.7%.
Data out Wednesday morning showed February consumer prices increased 0.4%, equal with what economists polled by Dow Jones were expecting. The Consumer Price Index gained 1.7% on a year-over-year basis, also within expectations.
Investors will also be watching Wednesday’s 10-year Treasury auction of $38 billion in notes at 1 p.m. ET for clues into the next direction for rates.
House Democrats are on track to pass the $1.9 trillion stimulus bill Wednesday morning. President Joe Biden is expected to sign the bill this weekend and checks of up to $1,400 should start going out this month.
The anticipated stimulus and rise in rates has divided the market recently, largely favoring stocks leveraged to a recovering economy over the tech and growth stocks that led during the pandemic.
On Tuesday however, tech stocks snapped back. The Nasdaq Composite climbed 3.7% to post its best day since November as investors poured back into popular growth names. Tesla surged 19.6% for its biggest one-day pop since February 2020. Apple and Facebook popped more than 4% each, while Amazon rallied 3.8%. Before the snapback, the tech-heavy benchmark had fallen into correction territory on Monday, or down more than 10% from its recent high.
Tech stocks continued their comeback Wednesday morning following the tame inflation data. Higher rates have raised concerns about valuations for tech stocks.
Tesla jumped another 2% in Wednesday’s premarket. Zoom Video was also higher.
“Corrections … create natural inflection points for traders,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial. “Let’s not forget that less than a year ago traders interpreted one of the biggest negative macro events in market history as a buying opportunity, so there’s little reason to think otherwise given all the positive signals around us today.”
The bounce in tech coincided with a decline in bond yields. The 10-year Treasury yield slid more than 5 basis points to 1.54% after trading as high as 1.62% on Monday.
The 10-year was at about 1.56% early Wednesday, unchanged following the inflation data.