U.S. stock futures wobbled Tuesday ahead of data on consumer spending and industrial activity that will give investors fresh insights into the pace of the economic recovery.
Futures tied to the S&P 500 and the Dow Jones Industrial Average were relatively flat. Both major indexes closed at record highs on Monday. Contracts for the technology-focused Nasdaq-100 gained 0.3%, suggesting the tech sector could extend its rebound when the stock market opens.
Tech stocks have steadied in recent sessions after taking a tumble when bond yields shot up in late February and early March. Investors are grappling with the implications of a big wave of government spending and the relaxation of lockdowns on the economy.
Investors’ concerns that a surge of growth and inflation could prompt the Federal Reserve to boost interest rates earlier than expected dented shares of tech companies that had benefited from low bond yields. Rate-setters at the central bank are gathering for a two-day policy meeting starting Tuesday. Money managers are looking to the Fed to address the rise in bond yields when the policy review concludes Wednesday.
“Everything is feeding off the fact there is this huge recovery taking place,” said Fahad Kamal, chief investment officer at Kleinwort Hambros, part of
“That should obviously help some of the sectors that have been beaten down for a long time and are obviously a lot cheaper,” Mr. Kamal said. “We are going to see a rise of the forgotten.”
However, Mr. Kamal doesn’t expect gains for sectors like banking and energy to come at the expense of highflying technology stocks. “These companies are still incredible,” he said. “There will be more catch-up, but it doesn’t mean tech is going to suffer.”
Data on retail sales are due at 8:30 a.m. ET. Economists expect bad weather to have contributed to a pullback in consumer spending in February after a jump in January. The boost from stimulus checks also likely faded last month.
Industrial production is expected to have softened last month, in part because of chip shortages and other supply-chain disruptions. Those figures are scheduled for 9:15 a.m.
In bond markets, the yield on 10-year Treasury notes slipped to 1.603%, from 1.609% Monday. Yields fall when bond prices rise.
Although yields have eased back at the start of the week, many investors expect them to lurch higher again in response to expectations of a pickup in growth and inflation.
“Bond volatility Is going to stay elevated probably at least through the summer, if not beyond that,” said
head of investment at Federated Hermès. “The bond market is considerably more nervous about inflationary prospects than the equity market appears to be.”
Every so often, stocks are rattled by rising bond yields, Mr. Murray said. “Then they forget about it and charge off again,” he added, pointing to gains for the stock market in recent sessions.
Oil prices were on course to fall for a third-consecutive session, trimming an advance that had pushed prices to their highest level in almost two years. Brent-crude futures, the benchmark in international energy markets, slipped 1% to $68.18 a barrel.
Overseas markets were broadly higher. The Stoxx Europe 600 rose 0.4%, led by shares of companies that produce cars and car parts. Shares of
gained 4% after the German car maker said it expected business to recover significantly this year.
China’s Shanghai Composite Index closed 0.8% higher and Japan’s Nikkei 225 rose 0.5%.
Write to Joe Wallace at Joe.Wallace@wsj.com
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