S&P, Nasdaq futures drop as yields firm ahead of inflation data

S&P 500 and the Nasdaq futures dipped on Wednesday as U.S. bond profits ticked higher ahead of key bond auctions while investors cautiously awaited a reading on inflation later in the day amid fears that the economy could potentially overheat.

U.S. consumer prices are expected to tick higher from 0.3%  in January to 0.4% in February. However, underlying prices are likely to remain unchanged. 

Quickened vaccine rollouts and a new big round of fiscal stimulus on the horizon have raised chances of higher inflation, activating a quick rise in Treasury yields that knocked off the tech-heavy Nasdaq about 7% from its Feb. 12 record closing high.

U.S. Treasury yield stood at 1.559% in 10-years, well off its 13-month peak of 1.613% with a focus on an auction of U.S. 10-year and 30-year debt later in the day for clues to where yields in the recently volatile market may be headed.

Dow E-minis were up 60 points, or 0.19% at 6:31 a.m. ET. S&P 500 E-minis was down 4.75 points, or 0.12%, and Nasdaq 100 E-minis were down 67.75 points, or 0.53%.

A 20% jump in Tesla Inc’s shares helped the Nasdaq log its best one-day percentage jump in four months on Tuesday, as investors picked up momentum stocks that had recently taken a beating due to higher yields.

While Apple Inc, Amazon.com Inc, Facebook Inc, and Microsoft Corp fell between 0.2% and 0.7%, Nasdaq 100 futures dropped about 0.4% as Tesla dropped about 1.5% in early trading.

High-growth tech companies are affected badly by Rising rates disproportionately because they are valued on earnings expected years into the future.

A chunk of the $1.9 trillion relief aid, which is in the process to be signed into law later this week, is suspended to end up in the stock market. It can provide a boost for GameStop and other stocks popular among retail investors active in online social media forums.

Shares of GameStop jumped another 13%, setting the videogame retailer on track for its longest streak of daily gains in six months. It has already doubled the company’s market value.

Among other “meme” stocks, Koss Corp and AMC Entertainment climbed 5.6% and 6.7%.