U.S. stock-index futures traded higher Wednesday, bouncing after a three-day selloff led by tech shares drove the Nasdaq Composite from a record high into a correction.
What are major benchmarks doing?
Futures on the Dow Jones Industrial Average YM00, +0.55% rose 110 points, or 0.4%, to 27,635, while S&P 500 futures ES00, +0.77% were up 21.25 points, or 0.6%, at 3,356.75. Nasdaq-100 futures NQ00, +1.53% gained 166.75 points, or 1.5%, to trade at 11,227.
The Nasdaq Composite COMP, -4.11% on Tuesday ended with a loss of 465.44 points, or 4.1%, at 10,847.69 — marking a pullback of just more than 10% from a record close over three trading sessions for its fastest ever fall from a record into correction territory. The Dow DJIA, -2.24% fell 632.42 points, or 2.3%, ending at 27,500.89, while the S&P 500 SPX, -2.77% dropped 95.12 points, or 2.8%, to close at 3,331.84.
What’s driving the market?
Much like the selloff, market watchers saw little in the way of a clear catalyst for Wednesday’s bounce. The tech-led rout came after a rally that some investors and analysts argued had tipped into euphoria, leaving the market vulnerable to a near-term pullback and more volatile trade.
“The past week has seen the U.S. IT sector gripped by its own ‘volatility doom loop’ with the correction in tech share prices forcing an unwanted rise in volatility over the broader market,” said Sean Darby, global head of strategies at Jefferies, who warned late last month that investors needed to be prepared for the risk of near-term drawdowns.
“It appears that investor positioning rather than the usual suspects of wider credit spreads, a stronger dollar etc. is to blame,” he said, in a note.
The market on Wednesday may shrug off a setback in a trial for a COVID-19 vaccine being developed by AstraZeneca PLC AZN, -1.52% AZN, +2.10%. The drugmaker, in what it described as a “routine action,” paused late-stage trials of its coronavirus vaccine candidate following an unexplained illness in one of the trial volunteers.
On the political front, Democratic presidential nominee Joe Biden on Wednesday proposed a new offshoring penalty that would establish a 28% corporate tax rate, plus a 10% “offshoring penalty surtax” on profits on any production by a U.S. company overseas for sales back to the U.S. The current tax rate on such profits is 30.8%. He also called for a 10% tax credit for companies that make investments that create jobs for American workers, such as by revitalizing existing facilities that have been closed, while also proposing a 21% minimum tax on all foreign earnings.
The U.S. economic calendar is light, with data on July job openings due at 10 a.m. Eastern.
Which companies are in focus?
- Shares of Tesla Inc. TSLA, -21.06% rose 6.8% in premarket trade a day after shares of the electric car maker dropped 21.1% for its largest one-day drop since going public.
- Lululemon Athletica Inc. LULU, -3.21% shares were down 4.6% in premarket trade after the athletic apparel company late Tuesday reported results that beat Wall Street estimates.
- Slack Technologies Inc. WORK, +0.86% shares dropped 17% in premarket trade, despite results late Tuesday that unexpectedly showed the collaboration software company broke even in its latest quarter.
- Shares of Tiffany & Co. TIF, +0.01% were lower in premarket action after LVMH Moet Hennessy MC, -1.38% said it wouldn’t be able to complete the previously announced takeover of the U.S. luxury goods retailer “as it stands.” LVMH cited a letter from the French government asking for a delay in light of the threat of tariffs on French products by the U.S., as well as Tiffany’s request to extend the deadline from Nov. 24 to Dec. 31.
- Snowflake Inc.outlined plans to raise up to $2.74 billion in its initial public offering, which includes orders from Berkshire Hathaway Inc. BRK.B, -0.23% BRK.B, -0.23% and Salesforce.com Inc. CRM, -5.27%, in a filing with the Securities and Exchange Commission late Tuesday.
How are other markets trading?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.691% was essentially unchanged at 0.676% as investors prepared for a heavy week of supply which could push prices lower. Bond prices move inversely to yields.
The ICE U.S. Dollar Index DXY, +0.19% , which tracks the performance of the greenback against its major rivals, was up 0.2% to 93.60.
Gold futures GCZ20, -0.60% fell 0.7% to $1,929.10 an ounce. U.S. crude oil benchmark futures CL.1, +2.14% jumped 0.8% to $37.07 a barrel, while global benchmark Brent crude BRN.1, +1.38% was up 0.4% to $39.95 one day after breaking below $40 a barrel for the first time since June on continued worries over the outlook for demand.
The Stoxx Europe 600 index SXXP, +0.69% was 0.5% higher, while the U.K.’s benchmark FTSE UKX, +0.38% gained 0.6%. In Asia, Hong Kong’s Hang Seng Index HSI, -0.63% fell 0.6% to close at 24,468.93, while Japan’s Nikkei NIK, -1.03% , settled at 23,032.54, down 1%.