# Dow futures gain ground after inflation report

What’s driving the market?

The U.S. February consumer price index showed inflation rising modestly, in line with expectations. Inflation rose 0.4% for the month, but with food and energy stripped out, the gain was 0.1%. Headline CPI picked up to 1.7% from 1.4% on an annual basis while the core 12-month increase dipped to 1.3% from 1.4%.

U.S. Treasury yields retreated slightly Wednesday, pausing for now the dynamic that’s been driving a rotation out of shares of highflying technology stocks and other growth shares and into more cyclically sensitive, value-oriented equities.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.553%
was down around 5 basis points at 1.547% ahead of an auction of $38 billion of benchmark 10-year notes. Yields have risen for five straight weeks along with inflation expectations.

“The recent rally in bond yields has hurt tech stocks the most, due to their high valuations,” said Charalambos Pissouros, senior market analyst at JFD, in a note.

“High-growth tech companies are valued based on earnings expected years into the future, and thus, when yields rise, their discounted present value declines. The opposite is true when yields retreat. That’s why Nasdaq was the main gainer yesterday,” Pissouros said.

Yields are being driven higher as investors look for U.S. economic growth to surge and for inflation to accelerate, at least in the near term. The OECD said this week that President Biden’s coronavirus aid package will add about one percentage point to global economic growth in 2021 and America’s growth rate was revised up to 6.5% from 3.2%.

The House is expected to complete passage of a $1.9 trillion COVID-19 relief bill as early as Wednesday, which comes on top of past rounds of aid spending.

Need to Know: The stimulus money isn’t going to be spent, Bank of America says, so here are the investment moves to make

Also see: The economy is ready to rip after stimulus and faster coronavirus vaccinations

Economic Preview: The U.S. economy is ready to surge again — so is inflation

Data on the federal budget is set for release at 2 p.m. It’s expected to show a $255 billion deficit.

Which companies are in focus?

• General Electric Co.
  GE,
  -1.20%
  shares fell 2% in premarket trade after it agreed to combine its aircraft-leasing business with Ireland’s AerCap Holdings NV as part a deal valued at more than $30 billion. Separately, GE said its board of directors would recommend shareholders approve a 1-for-8 reverse stock split, given the industrial conglomerate’s “significant transformation” over the past several years.

• Shares of videogame retailer GameStop Corp.
  GME,
  +26.94%
  were up more than 12% in premarket trade after a Tuesday rally took the meme-stock favorite of traders on Reddit’s WallStreetBets forum to its highest finish since the end of January.

• Roblox Corp. received a reference price of $45 a share from the New York Stock Exchange late Tuesday as the tween-centric game platform prepares to go public through a direct listing on Wednesday. It will trade under the ticker RBLX.

• Shares of MongoDB Inc.
  MDB,
  +8.66%
  rose 2.6% before the bell after the database company delivered results late Tuesday that topped Wall Street estimates while its outlook was much more muted.

• Qualtrics International Inc.
  XM,
  +7.34%
  shares were down 3% after the experience-management software company reported fiscal fourth-quarter results that topped analysts’ forecasts.

What are other markets doing?

• The ICE U.S. Dollar Index
  DXY,
  +0.01%
    a measure of the currency against a basket of six major rivals, ticked up 0.1% after hitting a more-than-three-month high on Monday.

• Oil futures  edged higher ahead of a report on inventory, with the U.S. benchmark
  CL.1,
  +1.03%
  up 44 cents or 0.4% to $64.45

• Gold futures
  GC00,
  -0.09%
  dropped $6.90, or 0.3%, to trade near $1,710.00 an ounce.

• The pan-European Stoxx 600
  SXXP,
  +0.35%
  ticked up 0.2% and London’s FTSE 100
  UKX,
  -0.14%
    lost 0.2%.

• In Asia, the Shanghai Composite SHCOMP slipped 0.1%, while Hong Kong’s Hang Seng Index HSI rose 0.5% and Japan’s Nikkei 225 NIK was virtually unchanged at 29,036.56.