US tech futures rise as lower bond yields soothe investors after the Nasdaq enters a technical correction
- US futures rose Tuesday after a sharp tech sell-off hit the
Nasdaqindex the previous day.
bond yieldshave unnerved investors, but the pressure eased Tuesday as selling cooled.
- Investors' eyes will be on US government bond auctions to gauge demand for the securities.
US stock-index futures rose on Tuesday as bond yields eased, after a sharp sell-off in technology stocks put the Nasdaq into correction territory on Monday.CSI 300 index dropping 2.15% despite government funds trying to counter the selling. Shares rose in Hong Kong and Japan.
US tech stocks took another battering Monday, with yields on government bonds continuing to rise as investors positioned for higher growth and inflation.Rising bond yields have weighed on stock markets because they make shares look less attractive. Higher rates and inflation also eat into the value of companies' futures earnings, weighing particularly on fast-growing tech companies such as Tesla that are yet to make much in the way of profit.
Dow Jones industrial average rose 0.97% as investors sold flashy tech stocks and rotated towards companies that stand to do better from strong growth as economies recover from coronavirus. "Stock
Yet the Nasdaq looked set to recover some ground on Tuesday as government bond yields eased. The key 10-year Treasury note yield, which moves inversely to the price, dipped 5.7 basis points to 1.537% after rising above 1.6% the previous day.
The dollar index fell 0.32% to 92.01, with lower bond yields making dollar-denominated investments less attractive.Investors' eyes will turn to US government bond auctions over the three days starting Tuesday, after an auction in February revealed weak demand and unnerved markets. Another weak auction could trigger a further rise in bond yields and hit stocks once again.
The $120 billion auctions "will be closely watched as litmus tests, with weak demand likely adding fuel to bearish sentiment," said Gennadiy Goldberg, senior US rates strategist at TD Securities, in a note.
Oil prices stabilized on Tuesday after falling sharply overnight, following a rapid uptick in the wake of an attack on Saudi Arabian oil facilities.Brent crude oil was 0.66% higher at $68.69 a barrel, while WTI crude was 0.55% higher at $65.41 a barrel.
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