U.S. stock futures edged higher Wednesday, pointing to a rebound in the major indexes after concerns about inflation and a rise in interest rates eased.
Futures tied to the S&P 500 ticked up 0.4%. Nasdaq-100 futures edged up 0.6%, suggesting that technology shares may recover some ground a day after the index declined almost 1.9%.
Stocks are poised to resume their upward trajectory Wednesday after Treasury Secretary Janet Yellen walked back earlier comments that interest rates might need to rise to keep the economy from overheating. She clarified after markets closed that she was neither predicting nor recommending that the Federal Reserve raise rates. Inflation isn’t likely to be a problem, and the Fed can handle it if it does become an issue, she said at The Wall Street Journal’s CEO Council Summit.
“Today is a bit of a relief rally,” said Edward Park, chief investment officer at Brooks Macdonald. “Markets are grinding higher and they are grinding higher on a relative basis because equities remain the most attractive.”
Strong earnings growth and signs that the economy is rebounding quickly are helping boost sentiment, Mr. Park said. “But there is this growing question of how long will monetary policy remain accommodative,” he added.
Money managers said inflation and the Fed’s potential response are likely to become a bigger concern in the second half of the year. Stocks are likely to continue to rally as long as people agree with the Fed’s view that the recent climb in inflation will prove to be fleeting, they said.
“Either the Fed is correct or they are very, very wrong,” said
global head of macro at Fidelity International. “It is entirely possible that the market oscillates between these two scenarios” for the next few months, he added.
The yield on the 10-year Treasury note ticked up to 1.607%, from 1.591% Tuesday. Bond yields rise when prices fall.
Ahead of the market opening, shares in Lyft rose more than 5% after the ride-hailing company said demand improved in the first quarter. Shares in
gained 4.6% premarket after the videogame publisher reported a higher first-quarter profit. Zillow Group shares climbed 4% after it swung to a quarterly profit due to the strong housing market.
The corporate earnings season, which has broadly surpassed analysts’ expectations so far, is set to continue.
Holdings are slated to post results after markets close.
Figures from the ADP National Employment Report, due at 8:15 a.m. ET, will indicate how much U.S. nonfarm private employment changed in April. Economists polled by The Wall Street Journal expect payrolls to rise by 800,000.
Investors will get fresh data at 10 a.m. reflecting the pace of activity in the services sector, including restaurants and entertainment venues, when the Institute for Supply Management releases its April index reading. More vaccinations, falling Covid-19 cases and efforts to open up segments of the economy are likely to have helped the sector.
Overseas, the pan-continental Stoxx Europe 600 rallied 1.3%, erasing most of its Tuesday losses.
In Hong Kong, the Hang Seng Index fell 0.5%. Markets in Japan, South Korea and mainland China were closed for public holidays.
Write to Caitlin Ostroff at email@example.com