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08 Mar 2021 | 11:42

US pre-open: Futures in the red as heightened bond yields offset stimulus headlines

(Sharecast News) - Wall Street futures were in the red ahead of the bell on Monday despite the US Senate passing Joe Biden's $1.9trn Covid relief bill. As of 1230 GMT, Dow Jones futures were down 0.05%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.53% and 1.44% weaker, respectively.

The Dow Jones closed 572.16 points higher on Friday, taking the sting out of what had been a rough week for many blue-chip stocks thanks to some solid non-farm payrolls data.

Optimism surrounding the passing of Biden's stimulus package was offset by higher bond yields prior to the open on Monday, leading to a continued rotation out of technology stocks.

The Democrat-led House of Representatives was pegged to ink the bill later in the week, with the President expected to sign it into law before unemployment aid programs expire on 14 March.

As far as the 10-Year yield was concerned, the benchmark note had already risen sharply in anticipation of more stimulus, with the yield up three basis points to 1.59% early on Monday.

However, the positive stimulus headlines bolstered stocks reliant on a strong economic recovery, with several retailers, energy companies and banks higher in pre-market trading.

IG's Joshua Mahony said: "A weekend breakthrough on the US stimulus front has seen the Senate narrowly pass the $1.9trn financial support package that is expected to drive a strong economic bounce-back over the course of 2021.

"However, while economic strength should bring optimism around the environment for stocks, there is significant anxiety that those big 2020 tech out-performers will come under pressure as we prepare for the reopening. Rising yields over the course of recent weeks does provide a backdrop for investors to focus on value names, and this stimulus breakthrough provides yet another reason for upside in yields."

On the macro front, January wholesale inventories figures will be published at 1500 GMT.

In the corporate space, fast-food chain Del Taco and beauty products manufacturer Revlon were both slated to report earnings throughout the course of the day.
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