Tech stocks set to drag Wall St lower at open; Fed minutes in focus

(Reuters) -Wall Street’s main indexes were set to drop at the open on Wednesday, led by losses in rate-sensitive technology stocks on fears that rising inflation could force the U.S. Federal Reserve to pare back its support soon.

FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid/File Photo

The yield on 10-year Treasury notes touched a one-week high, driving down shares of Apple Inc, Microsoft Corp and Facebook Inc by about 1% premarket.

Tech and other growth stocks are sensitive to yields as their value rests heavily on earnings years into the future, which are discounted more deeply when expectations of interest rate hikes rise.

Investors will also focus on minutes from the Fed’s April policy meeting, where it stood pat on interest rates. The statement is due to be issued at 2 p.m. ET (1800 GMT).

Strong inflation readings and signs of a worker shortage in recent weeks have fueled fears of inflation and roiled stock markets, despite reassurances from Fed officials that the rise in prices would be temporary.

“There is no question that inflation worries have creeped into the investor mindset which will weigh on the tech stocks and, in all likelihood, we will see yields go up,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“There is very active institutional hedging going on as they expect markets to correct itself in the near term.”

Wall Street’s main indexes fell in a late session selloff on Tuesday as weak housing starts data overshadowed better-than-expected earnings from Walmart and Home Depot.

Lowe’s Companies Inc’s shares fell 2.6% after reporting a 25.9% jump in quarterly same-store sales growth that failed to match larger rival Home Depot.

Target Corp gained 3.3% after it beat estimates for quarterly same-store sales, as a strong vaccination drive and stimulus checks encouraged shoppers to return to stores.

At 8:19 a.m. ET, Dow e-minis were down 273 points, or 0.8%, S&P 500 e-minis were down 39.75 points, or 0.96%, and Nasdaq 100 e-minis were down 192.5 points, or 1.46%.

Take-Two Interactive Software Inc rose 2.7% after reporting quarterly profit and sales above analysts’ estimates.

Shares of cryptocurrency and blockchain-related firms dropped as the price of bitcoin fell below the $40,000 mark after China imposed fresh curbs on transactions involving digital coins.

Crypto-exchange operator Coinbase Global fell 5.6%, bitcoin bank Silvergate Capital Corp shed 2.2% and miners Riot Blockchain and Marathon Digital Holdings were down 9.5% and 12.1%, respectively.

Source: Read Full Article