Traders work on the floor of the New York Stock Exchange (NYSE) on November 15, 2021 in New York City.
Spencer Platt | Getty Images
U.S. stock futures were lower early Wednesday morning after a two-day sell-off in tech shares, pressured by rising rates which boosted energy and financial stocks.
Dow Jones Industrial Average futures shed 118 points. S&P 500 and Nasdaq 100 futures hovered in mildly negative territory.
Retail stocks took a hit in extended trading following quarterly results. Nordstrom tumbled about 23% and Gap fell around 16%. Both companies reported earnings misses for the most recent quarter.
Computer hardware company HP’s shares got a more 7% after-hours lift from company earnings that beat on the top and bottom lines and higher first-quarter earnings guidance.
In regular trading, however, most tech stocks were in the red. The tech-heavy Nasdaq Composite lost 0.50% in Tuesday’s session, while the S&P 500 added 0.17% and bank and energy stocks helped push the Dow Jones Industrial Average 194 points higher.
The divergence in the sectors moved in tandem with Treasury yields, which tend to lift bank stocks and crush tech and other high-growth companies. Yields have been rising since President Joe Biden’s renomination of Jerome Powell as chairman of the Federal Reserve on Monday.
“It’s certainly a story of more rotation,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “The market is now with the Powell renomination thinking this is a reopening story, which sets aside any of the risks or concerns we might have about rising Covid infection rates.”
On Friday, just before the announcement of Powell’s renomination, investors were spooked by a resurgence of Covid-19 in Europe, which pushed tech shares higher.
Trading could slow in the coming days due to the Thanksgiving holiday, but investors will be watching a slew of economic data due out Wednesday, including weekly unemployment claims, a GDP update, personal income, consumer confidence reads and Federal Reserve FOMC minutes.
Most, though not all, companies have reported their financial results for the third quarter. Deere is scheduled to report before the bell Wednesday.
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