Wall Street set for muted open as rising yields dent tech shares By Reuters

© Reuters. FILE PHOTO: A street sign for Wall Street is mt4 account problemsseen outside of the New York Stock Exchange (NYSE) in New York City, New York, U.S., June 28, 2021. REUTERS/Andrew Kelly

By Ambar Warrick and Devik Jain

(Reuters) -U.S. stock indexes were set for a sluggish start on Tuesday as rising Treasury yields weighed on major technology stocks, while bank shares extended gains as investors priced in early monetary policy tightening by the Federal Reserve.

Futures tracking the tech-heavy Nasdaq 100 index underperformed in trading before the bell as yields extended gains after Jerome Powell's reappointment as Fed Chair raised market expectations for an interest rate hike by as soon as June 2022. [US/]

High-growth tech shares are sensitive to rising rates as investors discount future earnings against returns on debt.

Bank stocks extended Monday's gains, with Bank of America (NYSE:BAC), J.P.Morgan and Morgan Stanley (NYSE:MS) all rising about a percent each.

"It's possible that interest rates will be moved higher earlier than expected," said Rick Meckler, partner at Cherry Lane Investments In New Vernon, New Jersey.

"But that result, while positive for bank stocks, is not positive for the rest of the stock market, particularly technology, which trades on very high price/earnings multiples."

The Nasdaq and the S&P 500 had slipped from record highs on Monday, as Powell's nomination prompted a volatile session. Concerns over rising inflation also remained at the forefront, with investors fearing the potential economic impact of higher prices lasting longer than expected.

Focus is now on upcoming IHS business activity data, due at 9:45 a.m. ET (1445 GMT).

At 8:22 a.m. ET, Dow e-minis were up 27 points, or 0.08%. S&P 500 e-minis were down 1 points, or 0.02% and Nasdaq 100 e-minis were down 30.5 points, or 0.19%.

Trading volumes are expected to be low this week ahead of the Thanksgiving holiday on Thursday and a shortened session on Friday.

Among other premarket movers, Zoom Video Communications (NASDAQ:ZM) Inc fell 9.5% after its third-quarter revenue growth rate slowed to 35% as demand for its video-conferencing tools eased from pandemic-fueled heights last year.

XPeng Inc rose 4.4% on the electric vehicle maker's upbeat third-quarter results and outlook. Most other EV makers, including Tesla (NASDAQ:TSLA) Inc and Lucid Group, fell.

Best Buy Co Inc (NYSE:BBY) slid 11.7% after the electronics retailer forecast fourth-quarter comparable sales below expectations due to supply chain issues.

Chipmakers Micron Technology (NASDAQ:MU) and Western Digital Corp (NASDAQ:WDC) rose 2.0% and 3.3%, respectively, outpacing their peers after Mizuho upgraded the stocks to "buy" from "neutral".

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