US stock futures were mixed on Wednesday after the tech-heavy Nasdaq index staged its strongest rally since November as worries about rising bond yields and inflation eased.
Nonetheless, investors nervously wait for US inflation data due at 8.30 a.m. ET, which has the potential to cause another spike in yields and knock stocks once again.
Nasdaq 100 futures were off by 0.1% in European trading on Wednesday after the index jumped 4.03% on Tuesday, its biggest one-day rise since early November. S&P 500 futures were down 0.12%, while Dow Jones futures rose 0.34%.
The sharp sell-off in Asian equities eased overnight, with China’s CSI 300 rising 0.66% after having tumbled to a more than 2-month low. Hong Kong’s Hang Seng rose 0.47% and Japan’s Nikkei 225 was roughly flat.
Bond yields eased on Tuesday but inched slightly higher on Wednesday. The key 10-year Treasury note yield rose 1 basis point to 1.554%, although that was well off from a high of more than 1.6% touched on Friday. Yields move inversely to prices.
“The mild declines in government bond yields helped stock markets register respectable gains yesterday,” said David Madden, market analyst at CMC Markets.
“In the past few weeks, the bond market has often set the tone for equities as whenever yields spike, it tends to get equity traders worried about the possibility of higher inflation.”
Investors’ focus will be on US inflation data today, which could unnerve investors if it comes in higher than expected. Higher inflation erodes the value of companies’ future earnings, weighing in particular on tech stocks whose true earning potential lies many years in the future.
“CPI numbers for February are likely to show quite a rebound in headline inflation due to higher energy prices while core inflation should remain fairly constant,” said Jens Peter Sørensen, chief analyst at Danske Bank.
“The inflation in February is expected to rise to 1.7% from 1.4% in January, core inflation is expected to be unchanged at 1.4%.”
Investors will also be watching Capitol Hill, where the House could pass President Joe Biden’s $1.9 trillion stimulus bill.
The US dollar index rose 0.08% to 92.03, although that was off a high of 92.5 touched on Monday.
Bitcoin climbed around 1% to $54,760 after rising above $55,800 overnight, its highest since February 22.