U.S. stock futures were mixed early Monday morning as Wall Street looked to bounce back from a losing week.
Futures on the tech-heavy Nasdaq 100 gained 0.8% as the 10-year yield retreated. S&P 500 futures were about flat. Futures contracts tied to the Dow Jones Industrial Average declined 65 points.
The 10-year Treasury yield fell 4 basis points to 1.68%, after touching a 14-month high last week (1 basis point equals 0.01%). The move higher in rates has raised concerns about valuations on growth and tech stocks.
Shares of Tesla added 2% in premarket trading as rates fell and as Cathie Wood’s Ark Invest put out a new price target on the stock which calls for it to quadruple in 4 years.
The three major indexes lost ground last week. The Dow and S&P 500 slipped on Friday to finish the week down 0.5% and 0.8%, respectively, breaking two-week winning streaks. The Nasdaq Composite rose on Friday but still finished the week with a 0.8% loss.
The struggles for stocks came as bond yields jumped again last week, pressuring the tech and growth stocks that led the market back from its pandemic-sparked sell-off last year.
Even with the weakness last week, the S&P 500 and Dow are still near record highs, and the Nasdaq isn’t too far off. Darrell Cronk, chief investment officer of Wells Fargo’s Wealth and Investment Management, said the stock market still appeared to be on track for a multi-year climb.
“If you went down the list and started putting boxes of check-check-check-check, you would look at this in a vacuum … and say it looks like an early recovery cycle that’s roughly a year in that probably has a number of years yet to run,” Cronk said.
Optimism about the markets and the path of the U.S. economy has been growing as vaccines are rolling out across the country, with the pace of Americans getting shots climbing in recent weeks. Several states are seeing an increase in Covid-19 cases, however.
U.S. trial data released Monday showed the Covid vaccine developed by AstraZeneca and the University of Oxford is 79% effective in preventing symptomatic illness and 100% effective against severe disease and hospitalization.
Over the weekend, the industrials sector produced a major piece of corporate news. Canadian Pacific Railway announced that it was buying Kansas City Southern in a deal valued at $25 billion, creating a rail giant that connects, Canada, the U.S. and Mexico.