Stock futures were flat in overnight trading Tuesday after the Dow Jones Industrial Average hit a record high as investors flocked to stocks that could benefit from an economic rebound.
Blue-chip Dow futures were down 15 points. S&P 500 futures were little changed and Nasdaq 100 futures fell 0.1% lower.
While the Dow climbed 200 points to a new high on Tuesday, the technology-focused Nasdaq Composite suffered a 1.3% sell-off while US Treasury yields rose sharply. The closely watched benchmark 10-year government bond yield was 1.71% on Tuesday, triggering sales of growth-oriented technology stocks.
Megacap tech stocks underperformed the S&P 500 on Tuesday as "investors rethought the value of such long-term assets as interest rates rose," said Chris Hussey, managing director of Goldman Sachs, in a press release.
Investors awaited the release of the Federal Reserve's minutes of their December meeting. The central bank announced that it would accelerate the tapering of its bond-buying program. The Fed has also forecast three rate hikes for 2022.
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"The Fed is accelerating its deleveraging because inflation has expanded, which has the potential to drive 10-year yields higher," Ed Al-Hussainy, chief interest rate strategist at Columbia Threadneedle, said in a press release. "But the central bank must be careful not to act too aggressively, which could destroy the economic recovery and trigger a recession."
Wall Street strategists anticipate a bumpier path for the stock market as the Fed begins to tighten its ultra-loose monetary policy. The average year-end target for the S&P 500 is now 5,050, which is only a 5% increase from Tuesday's closing price of 4,793.54%, according to CNBC's Strategist Survey.
On the data front, ADP will release its December private payroll report, with economists polled by Dow Jones estimating 375,000 total new jobs.