Dow Jones futures fell early Wednesday, along with S&P 500 futures and Nasdaq futures, as Treasury yields rose and took some heat out of the market's latest run. The pullback came just a day after the rally pushed the S&P 500 and the Nasdaq composite to new highs.
That is why traders are watching the opening minutes of Wednesday so closely. Tuesday's gains showed how much momentum still sits under the market, but the move lower before the bell points to a more cautious setup as higher yields press against stocks that had been climbing.
The shift is sharp because Tuesday was still a strong day on the surface. The stock market rally kept advancing, the major indexes pared intraday gains, and the S&P 500 and Nasdaq composite both finished at new highs. Small caps lagged, and biotech stocks took a hit, with Vaxcyte, Moderna and Revolution Medicines among the steepest losers.
What was not explained was the spark for the move in Treasury yields early Wednesday. Even without that missing piece, the message for the new session is clear: the market is starting from a weaker opening than it had on Tuesday, and the first test will be whether rising yields can keep pressure on futures once trading gets underway.
