(Reuters) – Major U.S. stock indexes were headed for a higher open on Tuesday with the Nasdaq set to rebound after a steep selloff in the previous session, as U.S. bond yields retreated and investors scooped up beaten-down technology stocks.
Tesla Inc advanced about 6%, while Apple Inc, Amazon.com Inc, Facebook Inc and Microsoft Corp jumped about 2% each in early trading.
Signs that a $1.9 trillion coronavirus relief package was closing in on final approval sparked a spike in yields on Monday, pushing the tech-heavy Nasdaq to end more than 10% below its Feb. 12 closing high that confirmed a correction.
U.S. 10-year Treasury bond yields eased to 1.54% after hovering near 13-month highs of 1.613% in the prior session. Longer-dated yields have jumped over the last month as investors price in faster-than-expected economic rebound and higher inflation.
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.
“Tech stocks are overdue for some kind of bounce after the downfall they have had so far with most investor maintaining a positive outlook on tech stocks in the medium to longer term,” said Michael Sheldon, chief investment officer at RDM Financial in Westport, Connecticut.
“Potential headwind for the market is if interest rates rise further from this point over the short period … since they have risen too fast in too little time.”
At 8:17 a.m. ET, Dow E-minis were up 110 points, or 0.35%, S&P 500 E-minis were up 35.75 points, or 0.93% and Nasdaq 100 E-minis were up 273.5 points, or 2.22%.
The rise in yields has accelerated a rotation from “stay-at-home” winners to stocks primed to benefit from an economic reopening, helping the blue-chip Dow hit an intraday record high on Monday.
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.
Big U.S. lenders including Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co and Goldman Sachs slipped about 1% a day after the bank index vaulted to a new 14-year peak.
GameStop was up 11% at $215.95, building on Monday’s rise of over 40% on the video retailer’s e-commerce strategy and speculation that small investors will pour stimulus checks into markets.
Reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Maju Samuel