U.S. stocks are seen opening higher Wednesday, rebounding after the previous session’s rout, with U.S. debt ceiling negotiations and Micron’s downbeat guidance in focus.
The Dow Futures contract was up 155 points, or 0.5%, S&P 500 Futures traded 24 points, or 0.6%, higher, while Nasdaq 100 Futures climbed 90 points, or 0.6%.
The Dow Jones Industrial Average dropped over 500 points, or 1.6%, on Tuesday. The S&P 500 fell 2%, while the tech heavy Nasdaq Composite was particularly hard hit, slumping 2.8%, its worst day since March.
Surging bond yields prompted the selloff, with the benchmark 10-year Treasury yield climbing to its highest level since June just below 1.57%, after Fed chair Jerome Powell warned, in a speech to the Senate Banking Committee, that the recent rise in inflation may last longer than anticipated.
The 10-year yield has slipped back to 1.51% on Wednesday, easing the pressure on the mega cap tech stocks, like Facebook (NASDAQ:FB), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), which all dropped more than 3% on Tuesday.
That said, Micron Technology (NASDAQ:MU), one of the world’s biggest memory chip suppliers, is set to weigh on the sector when the market opens Wednesday after it provided disappointing first-quarter guidance late Tuesday. It also warned of supply chain issues that could disrupt shipments further down the line.
Also weighing on sentiment is the prospect of a U.S. default with lawmakers in Washington at loggerheads over whether to extend government funding beyond Thursday and raise or suspend the debt ceiling.
The economic data slate is largely empty Wednesday, with the sole release of importance being the pending home sales for August. These are due at 10 AM ET (1400 GMT), and are expected to have risen 1.4% month-on-month after a 1.8% drop in July.
Crude prices weakened Wednesday following a surprise increase in U.S. crude stockpiles, interrupting a rally that was given fresh legs by OPEC’s upbeat forecast for global demand on Tuesday.
U.S. crude inventories grew by just over 4 million barrels last week, according to the American Petroleum Institute. That would be the first increase in the country’s stocks in eight weeks if confirmed by the U.S. Energy Information Administration later Wednesday.
U.S. crude futures traded 0.6% lower at $74.81 a barrel, slipping from its highest level since July, while the Brent contract fell 0.6% to $77.91, after previously reaching its highest since October 2018.
Additionally, gold futures rose 0.3% to $1,742.35/oz, while EUR/USD traded 0.3% lower at 1.1645.