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Dow Futures Turn Higher On Oil and Bank Stock Gains; Nasdaq Resumes Slide

The Nasdaq could slide back into correction territory Monday as further signs of an solid post-pandemic rebound rekindle inflation concerns and extend the recent march higher for U.S. Treasury bond yields.

The Monday Market Minute

  •  Global stocks mixed as U.S. Treasury bond yields hold near one-year highs following the weekend passage of President Biden's $1.9 trillion stimulus bill.
  • A formal House vote, likely Tuesday, should put the bill on Biden's desk for signing before the March 14 deadline.
  • China exports surge 155% in February as the world's second-largest economy roars back to life, boosting its global trade surplus past $130 billion.
  • Benchmark 10-year Treasury bond yields hold near a 52-week high of 1.602% as inflation expectations jump following Friday's jobs report and the Biden stimulus bill.
  • CDC data shows 90.3 million coronavirus vaccine doses have been administered as of yesterday, a pace of more than 2.5 million per day against a new case rate of around 60,000.
  • Oil surges to the highest in more than 2 years after Yemeni Houthi rebels claim responsibility for a missile strike on Saudi Arabia's oldest and biggest oil facility on the Persian Gulf.
  • U.S. equity futures suggest a mixed open on Wall Street with a focus on big name tech stocks such as Apple, Tesla and Microsoft as well as a move to a two-year high for General Electric.

U.S. equity futures traded mixed Monday, with tech stocks set for another steep decline, as investors look for another jump in Treasury bond yields following the weekend passage of President Joe Biden's $1.9 trillion stimulus bill and stronger-than-expected economic data from Europe and China. 

Dow futures turned higher, in fact, amid a pre-market jump in banking and oil stocks as well as comments from hedge fund manager David Tepper that suggested the recent rise in government bond yields may stall amid renewed buying from Japanese investors. 

Tech stocks have fallen well ahead of the broader market since hitting their last all-time high on February 12, linked mostly to the relentless rise in U.S. Treasury yields, which are now on pace for their seventh weekly increase, the longest streak of gains in at least eight years. 

The Saturday approval of President Biden's stimulus bill -- which includes $1,400 checks to American households and $300 in enhanced unemployment benefits -- will likely add to both market concerns for near-term inflation and the upward march in bond yields. 

Combined with Friday's roaring jobs report, which indicated a stronger-than-expected 379,000 new positions created last month, blowout export February export data from China and the accelerated pace of the U.S. vaccine rollout, economists are forecasting a robust post-pandemic recovery that could induce further rotation from growth stocks into value stocks over the coming months. 

Futures contracts tied to the Nasdaq Composite index, which has fallen 8.3% from its February 12 peak, are priced for a further 100 point opening bell decline Monday as benchmark 10-year Treasury note yields hold near a 52-week high of 1.599% 

The S&P 500, meanwhile, is set for an 4 point bump to start the trading day while the Dow Jones Industrial Average is set for a 150 point gain with likely early boosts from oil and banking stocks.

WTI crude, in fact, hit the highest levels since October 18 in overnight trading, while Brent topped the $70 mark, after Yemeni rebels claimed responsibility for a missile strike on the Saudi Arabian port of Ras Tanura, the Kingdom's oldest and largest oil refinery. 

U.S. crude futures were marked 29 cents higher from their Friday close at $65.80 per barrel, while Brent contracts for May delivery were last seen 31 cents higher at $69.05 per barrel, with gains capped by a stronger U.S. dollar, which jumped 0.3% to a near four-month high against a basket of its global peers in overnight trading.

General Electric  (GE)  shares look set to test fresh two year highs amid reports that the industrial group will merge its aircraft leasing business with Ireland's AerCap Holdings  (AER)  in a deal that could be worth more than $30 billion.

In Europe, a key reading of investor sentiment hit the highest levels in more than a year for the month of February, data published Monday indicated, helping stocks rebound from Friday's steep declines.

The Stoxx 600 was marked 0.6% in the opening hours of trading, paced by a 1% gain for the trade-sensitive DAX performance index in Germany. 

Overnight in Asia, China posted a record rise in February exports as its economy roared back to life following the depths of its pandemic shutdown, with overseas shipments rising 155% from last year. That put its trade surplus with the rest of the world at $130.25 billion for the first two months of the year, with around 40% of that figure -- $51.3 billion -- linked to the United States.

The data wasn't strong enough to stem the tide of losses in the region, however, as the MSCI ex-Japan index slumped 1.5% amid the jump in bond yields and the ongoing recovery for the U.S. dollar, with Japan's Nikkei 225 closing 0.42% lower at 28,743.25 points.