U.S. stock index futures were little changed in overnight trading on Wednesday after the Dow closed at a record high during normal trading hours.
Futures contracts tied to the Dow Jones Industrial Average gained 23 points. S&P 500 futures were flat, while Nasdaq 100 futures slid 0.1%.
The move comes after the Dow jumped 425 points to close at a record high in a volatile session that at one point saw the 30-stock average drop more than 110 points. The S&P 500 advanced 1.1%, while the Nasdaq Composite gained 1%. Earlier in the session, the tech-heavy index was down 1.3%.
Rising rates weighed on stocks early in the session as the U.S. 10-year Treasury yield topped 1.4% and hit its highest level since February 2020. Higher rates could spur investors to rotate out of stocks and into bonds. Higher rates could also hit the growth-oriented technology sector especially hard.
“Our base case is that rates will continue to rise due to increasing growth and inflation expectations and, eventually, Federal Reserve normalization,” said Ryan Detrick, chief market strategist at LPL Financial. “We also believe if rates move too high too fast, the Fed will intervene to make sure rising rates don’t become too restrictive and disrupt equity markets or the real economy,” he said.
Yields came off their highs after Federal Reserve Chair Jerome Powell continued to downplay the threat of inflation.
“It seems pretty clear to us that the move in rates has been driven by growing optimism about economic growth, and rates are finally ‘catching up’ to the bullish growth outlook in equities,” said David Lefkowitz, head of equities Americas at UBS Global Wealth Management. “So equity investors should not be overly concerned.”
On the data front, initial jobless claims numbers will be released at 8:30 a.m. ET on Thursday, with economists surveyed by Dow Jones expecting a print of 845,000. Also at 8:30 a.m. ET the U.S. Department of Commerce will release its second estimate on fourth-quarter GDP.
It will also be a busy day on the earnings front with a number of companies set to release quarterly results. Best Buy, Papa John’s and Domino’s Pizza are among the names on deck before the opening bell. After the market closes, Salesforce.com, Beyond Meat, Etsy and Caesars Entertainment are among the names reporting.
Newly public companies Airbnb and DoorDash are also slated to report earnings on Thursday after the closing bell.
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