U.S. stock futures were lower early Wednesday morning as rising rates continued to frighten away investors from high-priced tech shares.
Other factors were also influencing the market early Wednesday:
- Traditional retail stocks took a hit following poor quarterly results. Gap lost 21% and Nordstrom tumbled about 27% in premarket trading. Both companies reported earnings misses for the most recent quarter.
- Rising Covid cases in Europe continued to worry investors. Germany was considering a full Covid lockdown.
- A slew of of economic data due out this morning will dictate trading, including weekly unemployment claims, a second GDP update and the Fed’s preferred inflation gauge (PCE deflator). The Fed will release the minutes for their last meeting this afternoon.
Dow Jones Industrial Average futures shed 92 points, or 0.3%. S&P 500 futures lost 0.2% and Nasdaq 100 futures also shed 0.2%.
Yields have been rising since President Joe Biden’s renomination of Jerome Powell as chairman of the Federal Reserve on Monday. The 10-year Treasury yield ended last week at 1.55% and was last at 1.65% Wednesday.
The move in rates has sent investors fleeing from tech and growth shares, while boosting some bank stocks and energy shares. The divided market has left the Dow in the green for the week so far, the S&P 500 slightly lower and the Nasdaq Composite down by about 1.8%.
U.S. markets are closed Thursday for Thanksgiving and will close early on Friday in a shortened session.
“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.”
Gap shares plummeted after the company said third-quarter results fell short because of product delays. Earnings last quarter were just 27 cents a share, nearly half what analysts had expected.
Tesla shares were lower again after Elon Musk sold another $1 billion in stock.
Computer hardware company HP’s shares got a more than 6% lift in the premarket after reporting earnings that beat on the top and bottom lines and issuing higher first-quarter earnings guidance.