‘This is not inflation’: Economist says expectations are unanchored from reality

U.S. stock futures were lower in early Tuesday trading after tech stocks fell sharply to start the week.

Futures tied to the Dow Jones Industrial Average dropped 92 points. Those for the S&P 500 were in slightly negative territory, while futures on the Nasdaq 100 fell more than 200 points.

In corporate developments, Facebook reached an agreement with the Australian government and will restore news pages in the country again, just days after restricting them.

The move in futures comes after a Monday session marked by stark differences in the sectors of the market. The tech-heavy Nasdaq Composite slid 2.5%, while the Dow rose a modest 27 points. Travel stocks, including airlines and cruise lines, rose sharply across the board, but Apple and Tesla declined.

The broader market finished lower, as the S&P 500 slipped 0.7% for its fifth-straight negative session. The decline came as U.S. Treasury yields rose once again, reflecting a fall in the price of bonds. The 10-year Treasury yield was trading above 1.36% on Monday after starting the year below the 1% mark.

“The higher Treasury yields move up, the quicker investors are rotating out of high-flying tech stocks and into stocks in the Russell 2000 Index and Dow Jones Industrial Average,” OANDA senior market analyst Edward Moya said in a note.

The bond market will likely remain a key topic of discussion on Tuesday, as Fed Chair Jerome Powell begins his two days of Congressional hearings. The central banker has been adamant that the Fed is not considering raising its benchmark interest rate, but Powell’s comments will be watched closely for possible insight into the economy’s inflation outlook.

Inflation fears have risen in recent weeks as policymakers debate another round of economic relief as Covid cases decline amid the rollout of vaccines. The U.S. surpassed 500,000 deaths from the virus on Monday, according to Johns Hopkins University.

Investors will also get new data on consumer confidence and home prices on Tuesday. Retailers Home Depot and Macy’s will report earnings before the opening bell.