US stock futures are higher on Wednesday as stocks continue their recovery from a one-day loss earlier in the week.
Dow Jones Industrial average futures rose 184 points, or 0.5%. S&P 500 futures gained 0.4%. Nasdaq 100 futures traded slightly in the green.
The Dow plunged 725 points on Monday, its worst price in 8 months. On Tuesday it then rose by almost 550 points. Futures suggest this rebound will continue as investors step in again to buy the dip.
The bond market – particularly the yield on 10-year government bonds – is driving volatility in the equity markets. On Wednesday, the 10-year yield rebounded 4 basis points to 1.25% (1 basis point equals 0.01%). The yield fell to a new 5-month low on Monday before stabilizing on Tuesday. The decline in interest rates is unsettling equity investors by signaling a possible slowdown in the economy due to the spread of Covid variants or a possible error by the Federal Reserve.
Stocks, which would benefit most from a sustained rapid economic reopening, should bounce back on Wednesday after recovering from the sell-off on Monday in the previous session. Carnival’s shares were up nearly 3%. Las Vegas Sands was up 2%.
Energy stocks were higher as oil continued to rebound after falling below $ 70 a barrel on Monday.
Dow member Johnson & Johnson lifted sentiment after the drug maker reported better-than-expected earnings and revenue in the second quarter and also raised its forecast for 2021. In pre-market trading, the share gained around 1%.
Chipotle stock rose 5% in pre-trading hours as the Mexican fast food chain reported quarterly sales that surpassed pre-pandemic levels as diners returned to their restaurants for dinner.
Netflix reported disappointing subscriber forecasts for the third quarter after the bell on Tuesday. The streaming giant expects 3.5 million net subscribers in the third quarter, nearly 2 million below analyst estimates. The company also reported results that fell short of expectations.
The Netflix share has hardly changed in pre-market trading recently.
On Tuesday, reopening stocks rallied sharply from Monday’s sell-off sparked by a Covid-inspired global growth fear. American Airlines was up 8.4% and Norwegian Cruise Line was up 8.3%.
Some strategists see the market heading for a volatile phase in which there could be a deeper pullback. Investors juggle inflation concerns and new Covid cases rebound in the US as the Delta variant spreads.
“I think what we’ve seen here are the early warning shots of a correction that we’re likely to see … in late August, September, October,” said Matt Maley, equity strategist at Miller Tabak.
The winning season continues on Wednesday with important reports from Coca-Cola, Johnson & Johnson, Verizon, CSX, Las Vegas Sands and Texas Instruments. According to FactSet, about 85% of the S&P 500 companies that have reported to date have beat estimates.
– with reports from CNBC’s Patti Domm.