US stock futures rallied on Wednesday after a session marked by major weakness in technology stocks.
Dow futures rose 88 points and S&P 500 futures rose 0.4%. The biggest gains were made on futures on the tech-heavy Nasdaq 100, which rebounded 0.7%.
Key tech stocks rebounded in early trading. Apple and Tesla both gained 1% after falling 3.5% and 1.7% respectively on Tuesday.
There was also good profit news in the technology area. Activision Blizzard was up more than 5% and ride hail company Lyft was up over 4% in premarket trading after better-than-expected earnings reports.
Outside of tech, General Motors shares rose more than 3% in early trading after gains beat expectations.
Investors left tech and growth stocks on Tuesday, pushing the Nasdaq Composite down 1.9%. Coupled with the losses at Apple and Tesla, Netflix’s shares lost 1.2% and Microsoft fell 1.6%. Amazon and Facebook lost 2.2% and 1.3%, respectively. Alphabet fell 1.6%.
The S&P 500 erased Monday’s gains and fell 0.7%. The Dow Jones Industrial Average ended the day about 20 points after losing more than 300 points at one point on Tuesday.
The Russell 2000 small-cap benchmark fell 1.3%. Reopening games like airlines, casinos, and cruise lines also saw selling pressure.
There are a number of possible reasons for the downside pressure, including fears of rising inflation, concerns that the Federal Reserve may have to ease monetary stimulus sooner than telegraphed, and the potential for tax hikes in the coming months.
US stocks hit the lows of the day following Treasury Secretary Janet Yellen’s comments that interest rates may need to rise slightly to prevent the economy from overheating. Later in the day, the former Fed chair softened her comments, saying she respected the independence of the central bank and was not trying to influence decision-making there. “It’s not something I predict or recommend,” Yellen told the Wall Street Journal CEO Council Summit in follow-up comments.
While first quarter earnings were strong and companies raised their forecasts, stocks don’t always move higher after good news. Investors told CNBC this could mean the positive outlook is already priced into stocks.
Personal payrolls rose 742,000 jobs in April, according to ADP. This result was below the expectations of 800,000 jobs of the economists surveyed by Dow Jones.
ADP has revised its March report upwards by 48,000 digits. Those numbers are ahead of Friday’s closely watched job report.
Two key readings on the service sector will also be published on Wednesday morning.
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