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US open: Stocks record early gains as bond yields retreat

Wall Street stocks were firmly in the green at the start of trading on Tuesday following a mixed session for major indices a day earlier.
As of 1535 GMT, the Dow Jones futures Industrial Average was up 0.70% at 32,023.96, while the S&P 500 was 1.73% firmer at 3,887.58 and the Nasdaq Composite came out the gate 3.30% stronger at 13,024.94.

The Dow Jones opened 221.52 points higher on Tuesday, extending gains recorded in the prior session, while the tech-heavy Nasdaq surged more than 410 points.

Tech looked set to bounce back from heavy losses recorded over the last few sessions on Tuesday, with the yield on the 10-year Treasury note falling more than six basis points to 1.52% after trading as high as 1.62% on Monday.

IG’s Chris Beauchamp said: “Nasdaq futures have roared ahead in an early bid to make up some lost ground after their hefty pullback since the middle of February. The firesale in many big tech names has been driven by fears of how higher yields will damage the attractiveness of these high flyers, and the improved prospects for stocks that will benefit from reopening economies, but with many now much cheaper (compared to where they were) some will be eyeing up the sector, even if only for a quick rebound.

“The situation in the Nasdaq looks similar to late October, the last major pullback in the index, and with the mood-music around big tech turning distinctly sour the conditions are there for just the kind of rebound that will catch many by surprise.”

News that the US Senate had passed a $1.9trn economic relief and stimulus package, set to include another round of stimulus checks to everyday Americans, also continued to give a boost to stocks reliant on an economic reopening – with banks, airlines, cruise lines and retailers all rising on Monday amid expectations for President Joe Biden to sign the bill into law by 14 March.

On the macro front, the National Federation of Independent Business’ small business optimism index rose by 0.8 points in February to 95.8 but remained below the 98 average and pre-pandemic levels.

Still to come, Federal Reserve Bank of Dallas president Robert Kaplan will deliver comments at 2305 GMT.

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