S&P, Nasdaq futures slip as yields firm ahead of inflation data

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(Reuters) – Futures tracking the S&P 500 and the Nasdaq dipped on Wednesday as U.S. bond yields ticked higher ahead of key bond auctions while investors cautiously awaited a reading on inflation later in the day amid fears that the economy could potentially overheat.

U.S. consumer prices are expected to tick higher to 0.4% in February from 0.3% in the prior month. However, underlying prices are likely to remain unchanged.

Accelerated vaccine rollouts and a new hefty round of fiscal stimulus on the horizon have raised bets on higher inflation, triggering a sharp rise in Treasury yields that knocked off the tech-heavy Nasdaq about 7% from its Feb. 12 record closing high.

The 10-year U.S. Treasury yield stood at 1.559%, well off its 13-month peak of 1.613% with focus on an auction of U.S. 10-year and 30-year debt later in the day for clues to where yields in the recently volatile market may be headed.

At 6:31 a.m. ET, Dow E-minis were up 60 points, or 0.19%, S&P 500 E-minis were down 4.75 points, or 0.12% and Nasdaq 100 E-minis were down 67.75 points, or 0.53%.

The Nasdaq logged its best one-day percentage jump in four months on Tuesday, helped by a near 20% jump in Tesla (NASDAQ:TSLA) Inc’s shares as investors picked up momentum stocks that had recently taken a beating due to higher yields.

Nasdaq 100 futures dropped about 0.4% as Tesla dropped about 1.5%, while Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Facebook Inc (NASDAQ:FB) and Microsoft Corp (NASDAQ:MSFT) fell between 0.2% and 0.7% in early trading.

Rising rates disproportionately hurt high-growth tech companies because they are valued on earnings expected years into the future.

A chunk of the $1.9 trillion relief aid, which is on track to be signed into law later this week, is poised to end up in the stock market and could provide a boost for GameStop (NYSE:GME) and other stocks popular among retail investors active in online social media forums.

Shares of GameStop jumped another 13%, setting the videogame retailer on track for its longest streak of daily gains in six months and extending a rally that has already doubled the company’s market value.

Among other “meme” stocks, Koss Corp and AMC Entertainment (NYSE:AMC) climbed 5.6% and 6.7%.