U.S. stock futures were little changed early, Wednesday as investors weighed potential impact from President Joe Biden’s infrastructure spending plan.
Futures tied to the Dow Jones Industrial Average implied an opening loss of about 45 points. S&P 500 futures rose 0.1% while Nasdaq 100 futures climbed 0.6%.
Biden will unveil a more than $2 trillion package in infrastructure spending on Wednesday. The plan Biden would raise the corporate tax rate to 28% to fund it, an administration official told reporters Tuesday night. The White House said the tax hike, combined with measures designed to stop offshoring of profits, would fund the infrastructure plan within 15 years.
The major averages were pressured Tuesday by rising interest rates, as the U.S. 10-year Treasury yield notched a 14-month high of 1.77%. Bond yields have been on the rise this year amid a strong Covid-19 vaccine rollout and expectations of a broad economic recovery.
The Dow Jones Industrial Average lost more than 100 points, falling from a record high reached on Monday. The S&P 500 fell about 0.3%.
The Nasdaq Composite dipped about 0.1% as Facebook, Amazon, Apple, Netflix and Microsoft declined. Big Tech stocks are especially sensitive to rising rates as they depend on borrowing money cheaply to invest in their future growth.
On Tuesday reopening plays like airlines and cruise lines popped, after consumer confidence data expectations.
Jim Paulsen, chief investment strategist at the Leuthold Group said, “Stocks began the day trading lower wondering if the Archegos fiasco was just a one-off event or a contagion. Selling pressure intensified because bond yields broke to new highs for the year again pounding technology stocks.”
Paulsen added, “however, discussions surrounding yet another forthcoming stimulus bill and a surge in consumer confidence reminded investors that the world economy is experiencing an incredibly strong economic recovery giving cyclicals, small-cap stocks, and most international markets a revival bounce today,”
Private payroll data from ADP will be released at 8:15 a.m. ET on Wednesday. Economists polled by Dow Jones are expecting 525,000 private-sector jobs were added in March, well above the 171,000 added in February.
ViacomCBS and Discovery recouped some of the major losses from the past few sessions after Archegos Capital Management was forced to liquidate its position in the media stocks. Some of the banks ensnared in the margin call last week rose on Tuesday.