November 27, 2020
Markets PAID

Stock Futures Rise, Led by Tech's Recovery

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U.S. stock futures rose Wednesday, with big technology stocks poised to erase some of this week’s losses.

Futures tied to Dow Jones Industrial Average advanced 0.8%, setting up the blue-chips index for a third consecutive day of gains. Contracts linked to the S&P 500 also climbed 0.8%, a day after it slid 0.1%. The mixed picture from Tuesday reflects investors rotating out of this year’s best-performing growth stocks and into cyclical sectors such as manufacturing and energy.

Futures linked to the Nasdaq-100 climbed 0.8%, signaling a potential recovery in the tech sector after the opening bell.
Facebook,
Apple,
Amazon.com,
Netflix
and Google parent Alphabet—the so-called FAANG stocks—and
Microsoft
edged higher in premarket trading.

Technology stocks are poised to regain some ground Wednesday after retreating for much of the week.

Technology stocks are poised to regain some ground Wednesday after retreating for much of the week.

Photo: Michael Nagle/Bloomberg News

Most of those stocks, which powered markets higher through 2020, took a drubbing earlier this week as investors cheered progress toward a Covid-19 vaccine and turned their focus to stocks that had fared poorly.

“What we are seeing now is the classic saying that in the short term, the market is a voting machine, and in the long term, it is a weighing machine,” said Altaf Kassam, European head of investment strategy and research at State Street Global Advisors. “What we saw in the tech sector was that it was the FAANGs that bore the brunt of the sell off, but more broadly, tech didn’t do that bad. That was the knee-jerk reaction.”

The rollout of a Covid-19 vaccine is likely to power the global economic recovery and lift stocks across sectors, giving momentum to a new leg of the market’s rally, investors said.

“There is still a lot of money on the sidelines,” according to Mr. Kassam. “With the optimism that the vaccines could now come, [that] means that some of that money could start to drift back in.”

Still some investors are focusing on the hurdles facing making a vaccine widely available, and questions about the size of the next fiscal stimulus package. Coronavirus hospitalizations set a record in the U.S. on Tuesday in a fresh reminder that the pandemic is far from over.

“What you are seeing over the last 24 hours is a tug of war between those who see the vaccine as a close-your-eyes moment and those who want to look at the risks now,” said Jim McCormick, global head of desk strategy at Natwest Markets. “At the moment, the former group is winning.”

U.S. bond markets are closed Wednesday for Veterans Day. The yield on 10-year Treasurys has climbed for four straight days and ended Tuesday at 0.970%, its highest since March 19.

In commodities, oil prices extended their advance. Brent crude oil, the international benchmark, rose 2.5% to $44.72 a barrel.

Overseas, the pan-continental Stoxx Europe 600 edged up 0.5%, led by the health-care sector. Among individual equities, shares in Germany’s
Continental
fell 4% after the auto-parts maker forecast lower sales for this year.

Major Asian equity benchmarks ended the day on a mixed note. Japan’s Nikkei 225 Index rose 1.8% to close at its highest level since 1991. South Korea’s Kospi rose 1.4% to its highest in over two years.

The main benchmarks in both Hong Kong and China ended the day lower. Shares in some of China’s biggest technology companies fell sharply for a second day.

The move echoed a pullback in U.S. tech stocks on Tuesday, and came after China released new draft antimonopoly rules for online platforms. The rules signaled an increased appetite by Beijing authorities to rein in its dominant technology companies.

Hong Kong-traded shares in Alibaba, Tencent, Meituan and Xiaomi dropped between 7.4% and 9.8%.

Write to Will Horner at William.Horner@wsj.com

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