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Dow futures edge higher as investors await inflation data

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U.S. stock-index futures were mixed Wednesday as investors kept an eye on bond yields and awaited inflation data that will show whether consumer prices are beginning to rise significantly.

What are major indexes doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    +0.36%

    rose 110 points, or 0.4%, to 31,921.

  • S&P 500 futures
    ES00,
    +0.11%

    edged up 4.70 points, or 0.1%, to 3,878.

  • Nasdaq-100 futures
    NQ00,
    -0.09%

    edged down 12.50 points, or 0.1%, to 12,776.25.

The tech-heavy Nasdaq Composite
COMP,
+3.69%

jumped 464.66 points, or 3.7%, on Tuesday for its biggest one-day percentage gain since Nov. 4, according to Dow Jones Market Data. The bounce came a day after the index fell into correction territory, a pullback of 10% from a recent peak. The Dow
DJIA,
+0.10%

rose 30.30 points, or 0.1%, while the S&P 500
SPX,
+1.42%

logged a 1.4% gain.

What’s driving the market?

U.S. Treasury yields were back on the rise after taking a breather on Tuesday, renewing the dynamic that’s been driving a rotation out of shares of highflying technology stocks and other growth shares and into more cyclically sensitive, value-oriented equities.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.566%

was up around 2 basis points at 1.561%. Yields have risen for five straight weeks as inflation expectations have risen.

“The recent rally in bond yields has hurt tech stocks the most, due to their high valuations,” said Charalambos Pissouros, senior market analyst at JFD, in a note.

“High-growth tech companies are valued based on earnings expected years into the future, and thus, when yields rise, their discounted present value declines. The opposite is true when yields retreat. That’s why Nasdaq was the main gainer yesterday,” Pissouros said.

Yields are being driven higher as investors look for U.S. economic growth to surge and for inflation to accelerate, at least in the near term. The OECD said this week that President Biden’s coronavirus aid package will add about one percentage point to global economic growth in 2021 and America’s growth rate was revised up to 6.5% from 3.2%.

The House is expected to complete passage of a $1.9 trillion COVID-19 relief bill as early as Wednesday, which comes on top of past rounds of aid spending.

Need to Know: The stimulus money isn’t going to be spent, Bank of America says, so here are the investment moves to make

Also see: The economy is ready to rip after stimulus and faster coronavirus vaccinations

The U.S. February consumer-price index is due at 8:30 a.m. Eastern. Economists expect it to show a 0.4% rise after a 0.3% increase in January. Headline CPI is seen picking up to 1.7% from 1.4% on an annual basis. Core CPI, which strips out volatile food and energy prices, is expected to rise 0.1% after a flat January reading.

Economic Preview: The U.S. economy is ready to surge again — so is inflation

Data on the federal budget is set for release at 2 p.m. It’s expected to show a $255 billion deficit.

Which companies are in focus?
  • General Electric Co.
    GE,
    -1.20%

    shares rose 2.8% in premarket trade after it agreed to combine its aircraft-leasing business with Ireland’s AerCap Holdings NV as part a deal valued at more than $30 billion. Separately, GE said its board of directors would recommend shareholders approve a 1-for-8 reverse stock split, given the industrial conglomerate’s “significant transformation” over the past several years.

  • Shares of videogame retailer GameStop Corp.
    GME,
    +26.94%

    were up more than 8% in premarket trade after a Tuesday rally took the meme-stock favorite of traders on Reddit’s WallStreetBets forum to its highest finish since the end of January.

  • Roblox Corp. received a reference price of $45 a share from the New York Stock Exchange late Tuesday as the tween-centric game platform prepares to go public through a direct listing on Wednesday. It will trade under the ticker RBLX.

  • Shares of MongoDB Inc.
    MDB,
    +8.66%

    rose 1.3% after the database company delivered results late Tuesday that topped Wall Street estimates while its outlook was much more muted.

  • Qualtrics International Inc.
    XM,
    +7.34%

    shares were down 3.7% after the experience-management software company reported fiscal fourth-quarter results that topped analysts’ forecasts.

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