The Nasdaq and S&P 500 indexes were set to open lower on Tuesday as investors sold off high-flying growth stocks on valuation concerns ahead of Federal Reserve Chairman Jerome Powell’s testimony in Congress.
In another bout of a selloff in the technology sector, shares of Netflix Inc, Facebook Inc, Alphabet Inc, Microsoft Corp, Amazon.com Inc and Apple Inc fell between 1.3% and 2.3% in premarket trading.
“There’s definitely an assumption that inflation has crept and bled through and we are starting to see some impact of that assumption in the growth style of investing,” said Keith Buchanan, portfolio manager at GlobAlt in Atlanta.
“It’s hard to imagine a scenario in which there’s upside to the larger broader market if those large cap growth stocks don’t lead the way.”
Meanwhile, Powell is expected to reassure investors that the central bank will tolerate a faster pace of price increases despite concerns over a potential pick-up in inflation and a rise in bond yields.
The hearing before the Senate Banking Committee is scheduled to begin at 10 a.m. EST (1500 GMT) and will be Powell’s first since Democrats won the White House and control of both chambers of Congress.
The Nasdaq and the benchmark S&P 500 posted their biggest one-day percentage declines in February on Monday as inflation fears and overheating in asset markets hit the so called “stay-at-home” winner stocks.
Value stocks, which are poised to benefit from an economic rebound, have outperformed growth shares in February.
At 8:44 a.m. ET, Dow e-minis were up 1 points, or 0%, S&P 500 e-minis were down 21.75 points, or 0.56%, and Nasdaq 100 e-minis were down 239 points, or 1.81%.
Occidental Petroleum Corp slipped 2.9% after the oil producer posted a larger-than-expected fourth-quarter loss.
Home Depot Inc fell 2.3% after the home improvement retailer warned it was unable to predict how consumer spending would evolve this year.
Cryptocurrency miners Riot Blockchain Inc and Marathon Patent Group Inc slumped 13.1% and 14.8%, respectively, while bitcoin bank Silvergate Capital Corp slid 12.0% as bitcoin dropped nearly 17% to $45,000. Tesla Inc, which had invested $1.5 billion in the cryptocurrency recently, also tumbled 5.2% and was set to plunge into the red for the year.
U.S. consumer confidence data is due at 10 a.m ET, the reading of which is expected to hit 90 in February.