Futures tracking the Nasdaq 100 index sank 2% on Monday as the passage of a $1.9 trillion COVID-19 relief package by the U.S. Senate lifted bond yields, pressuring richly valued technology stocks and sparking inflation concerns.
The Senate on Saturday passed the stimulus package – one of the biggest in U.S. history – and President Joe Biden said he hoped for quick passage of the revised bill by the House of Representatives so he could sign it and send $1,400 direct payments to Americans.
Technology-related stocks, including Facebook Inc, Apple Inc and Amazon.com Inc, fell between 1.3% and 3% after bearing the brunt of the sell-off in the past three weeks on fears of higher interest rates as the benchmark 10-year Treasury yield scaled one-year highs.
Tesla Inc, which surged as high as $900 in the year since the coronavirus-driven crash in early 2020, lost another 3.4% after closing Friday at $597.95.
“Tech stocks are far from having corrected fully (after) their sharp rise, as is the case of Tesla, … as higher long-term interest rates compete with the dividend sometimes paid by such stocks,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Hopes of more fiscal stimulus and signs of faster economic growth following speedy vaccine rollouts had lifted Wall Street’s main indexes to record highs last month, but investors have dumped global equities on worries that rising inflation would result in a sudden tapering of monetary stimulus.
At 6:10 a.m. ET, Dow e-minis were down 21 points, or 0.07%, S&P 500 e-minis were down 20.25 points, or 0.53%, and Nasdaq 100 e-minis were down 185.5 points, or 1.46%.
Banks were among the rare gainers in pre-market trading as the yield on benchmark 10-year Treasuries stood near a 13-month high, while Wall Street’s fear gauge jumped nearly 3 points and was on course for its biggest one-day rise this month.