Nasdaq futures firm 2% as tech stocks recoup losses

FILE PHOTO: A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City, U.S., October 24, 2016. REUTERS/Shannon Stapleton

CALIFORNIA: Futures tracking the Nasdaq 100 index rebounded about 2% on Tuesday, a day after a steep selloff, as US bond yields retreated and investors scooped up beaten-down technology stocks.

Tesla Inc advanced about 4%, while Apple Inc, Inc, Facebook Inc and Microsoft Corp jumped about 2% each in early trading.

US 10-year Treasury bond yields eased to 1.54%, 6 basis points lower than its highest level this year. Longer-dated yields have jumped over the last month as investors price in faster-than-expected economic rebound and higher inflation.

Signs that a $1.9 trillion coronavirus relief packaged was closing in on final approval sparked a spike in yields on Monday, pushing the tech-heavy Nasdaq to close more than 10% below its Feb. 12 closing high that confirmed a correction.

Higher yields can weigh even more on tech and growth stocks with lofty valuations, as they threaten to erode the value of their longer-term cash flows.

“The firesale in many big tech names has been driven by fears of how higher yields will damage the attractiveness of these high flyers,” said Chris Beauchamp, chief market analyst at IG in London.

“But with many now much cheaper (compared to where they were) some will be eyeing up the sector, even if only for a quick rebound.”

The Dow on the other hand hit an intraday record high in the previous session as investors favored stocks primed to benefit from an economic reopening.

The global economic outlook has brightened as vaccine rollouts gain speed and the United States launches a vast new stimulus package, the Organisation for Economic Cooperation and Development said, hiking the policy forum’s forecasts.

Video game retailer Gamestop was set to gain for the fifth consecutive session, up 16.4% at $226.47 premarket, building on Monday’s 41.2% gain after the company said it had tapped shareholder Ryan Cohen to lead a shift towards e-commerce.

At 6:25 a.m. ET, Dow E-minis were up 191 points, or 0.6%, S&P 500 E-minis were up 42.5 points, or 1.11% and Nasdaq 100 E-minis were up 291.75 points, or 2.37%.