Futures contracts tied to the major U.S. stock indexes inched higher at the start of overnight trading Wednesday after both the S&P 500 and Nasdaq Composite closed at records.
Contracts tied to the S&P 500 and Nasdaq 100 both ticked north of their respective flatlines with gains of less than 0.1%. Dow futures rose 20 points.
The moves in futures came after a positive regular session for U.S. markets.
The S&P 500 rose 0.3% to an all-time high of 4,358.13, while the Dow Jones Industrial Average advanced 104.42 points to 34,681.79. The technology-heavy Nasdaq Composite closed just above its own flatline to eke out a record close.
Popular internet and technology stocks again outperformed the broader market on Wednesday as investors bought equity in companies that prioritize growth instead of the reopening names in the energy and retail sectors that proved popular in the first half of the year.
Apple, Microsoft and Amazon — up 1.8%, 0.8% and 0.5% on Wednesday — are each up by double-digits over the last month. While traders have cited several reasons for the shift back into Big Tech, most mention a marked decline in bond yields when discussing the move.
The downshift in the benchmark 10-year Treasury note yield continued Wednesday, when the rate fell to 1.296%, its lowest level since February. Higher yields reduce the value of future earnings relative to current earnings, meaning that the appetite for growth stocks tends to rise when rates fall.
“The 40 basis point decline in the yield on the benchmark 10-year Treasury note since late-March suggests that the global grab for yield remains a potent force, despite the Fed’s desire to let the economy run hot,” Steven Ricchiuto, U.S. chief economist at Mizuho Securities, wrote on Tuesday.
“A stronger currency, increased virus concerns oversea, and the associated demand for long-term Treasury notes and bonds implies reduced inflation expectations and increased risk of importing global deflation,” he added.
Looking ahead to Thursday’s session, investors will pore over the Labor Department’s latest jobless claims figures. The weekly update offers Wall Street regular insight into the pace of layoffs in the U.S. economy, which has been declining amid the Covid-19 vaccine rollout.
Economists expect to see 350,000 first-time applicants for unemployment benefits for the week ended July 3, according to Dow Jones.