Stock futures were flat in overnight trading Tuesday after the Dow Jones Industrial Average closed a record as investors flocked to stocks benefiting from the economic recovery. .
Dow blue-chip futures fell 15 points. S&P 500 futures were little changed and Nasdaq 100 futures fell 0.1%.
On Tuesday, while the Dow rallied 200 points to a new high, the tech-focused Nasdaq Composite sold off, falling 1.3%, amid a brisk rise in Treasury yields. Benchmarks are closely watched 10 year treasury Yields were as high as 1.71% on Tuesday, triggering sales of growth-oriented tech stocks.
Chris Hussey, chief executive officer at Goldman Sachs, said tech stock Megacap underperformed the S&P 500 on Tuesday as “investors reconsider the value of such long-term assets as rates soaring,” Chris Hussey, managing director at Goldman Sachs, said in a note.
Investors have awaited the release of minutes from the Federal Reserve from its December meeting. The central bank has vowed to accelerate the reduction of its bond-buying program. The Fed has also forecast three rate hikes in 2022.
“The Fed is accelerating liquidity elimination as inflation has widened, potentially pushing 10-year yields higher,” said Ed Al-Hussainy, senior interest rate strategist at Columbia Threadneedle. “But the central bank must be careful not to act too aggressively, which could derail the economic recovery and trigger a recession.”
Wall Street strategists are expecting a bumpy road ahead for the stock market as the Fed begins tightening its ultra-accommodating monetary policy. The median year-end target for the S&P 500 is now 5,050, up just 5% from Tuesday’s close of 4,793.54. according to the CNBC Strategist Survey.
On the data front, ADP will release its separate payrolls report for December with economists polled by Dow Jones estimating a total of 375,000 jobs added.
