Wall Street set to open higher as tech sell-off cools

(Reuters) – Wall Street’s main indexes were set to open higher on Wednesday as beaten down growth stocks found respite after sliding for six straight sessions, while a rise in Tesla shares aided in a reversal of declines for futures tracking the Nasdaq index.

FILE PHOTO: A Wall Street sign outside the New York Stock Exchange in New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri/File Photo

Microsoft Corp, Alphabet Inc, Amazon.com Inc and Apple Inc reversed declines to rise between 0.2% and 1.0% in trading before the bell.

Tesla Inc gained 3.8% after star investor Cathie Wood’s Ark Invest funds bought a further $171 million worth of the company’s shares in the wake of a sharp fall in the electric-car maker’s stock.

Markets were also reassured by comments from Federal Reserve Chair Jerome Powell, who on Tuesday pushed back on suggestions that loose monetary policy risked unleashing inflation.

“There could be a little bit of buy the dip in the market and that Powell believes inflation is much softer,” said Thomas Hayes, chairman of hedge fund Great Hill Capital LLC in New York.

“There is also the view that if she (Wood) is willing to step in to the riskiest stocks in the face of what Powell said yesterday, then maybe it is safe to go back into the water.”

The S&P 500 growth index, housing much of the high-flying technology-related stocks, fell more than 6% in the last six days on valuation concerns.

Tech stocks are particularly sensitive to rising yields as their value rests heavily on future earnings, which are discounted more deeply when bond returns go up.

Value-oriented stocks have enjoyed a bit of a bounce recently on hopes of a quicker economic rebound. The S&P 500 value index has risen for three straight days.

Banks, industrial and energy stocks edged higher, with Bank of America, Caterpillar Inc and Chevron Corp gaining between 0.5% and 1.1%.

At 8:21 a.m. ET, Dow e-minis were up 18 points, or 0.06%, S&P 500 e-minis were up 8.75 points, or 0.23%, and Nasdaq 100 e-minis were up 46 points, or 0.35%.

Wall Street’s main indexes slid from record highs last week on concerns over a potential spike in inflation, while Treasury yields have remained elevated in the recent past on expectations of a vaccine-backed and stimulus-supported economic recovery.

Lowe’s Cos Inc rose 1.9% after it beat estimates for quarterly same-store sales, benefiting from sustained demand from people sprucing up their homes during the COVID-19 pandemic.

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