Stock futures are flat after Nasdaq’s Monday comeback

U.S. stocks were flat early Tuesday after the major averages extended declines, until the Nasdaq rallied to snap a four-day losing streak.

Futures tied to the Dow Jones Industrial Average fell 4 points, or 0.01%. S&P 500 futures edged 0.06% higher, and Nasdaq 100 futures rose 0.17%.

In regular trading on Monday, the Nasdaq turned slightly green into the close after a day of continued declines from the previous week’s sell-off, sparked by a rate in bond yields and worries about upcoming actions by the Federal Reserve. It closed 0.05% higher and erasing a 2.7% loss. Meanwhile, the Dow lost 162 points, or 0.4%, while the S&P 500 slid 0.1%.

Stocks remained under pressure as bond yields continued to rise. On Monday the 10-year U.S. Treasury yield rose to 1.8%, after ending 2021 at 1.5%.

On Monday JPMorgan’s Marko Kolanovic put out a note saying markets can withstand higher yields, as well as omicron, and that investors should buy the dip in the tech stocks.

“The pullback in risk assets in reaction to the Fed minutes is arguably overdone,” he said. “Policy tightening is likely to be gradual and at a pace that risk assets should be able to handle, and is occurring in an environment of strong cyclical recovery.”

The Leuthold Group’s Jim Paulsen said that while the stock market is likely to encounter a correction this year – and last week’s action could perhaps have been the start of one – it will be met by strong company fundamentals.

“Historically, the stock market has suffered some nasty ‘temper tantrums,’ and numerous rate hikes eventually led to recessionary bear markets,” Paulsen said in a note Monday evening. “However, the current focus among investors may be misplaced. The stock market’s response may have less to do with the timing and number of rate hikes than it does with the ‘direction’ of real earnings.”

Earnings season will be in full swing by the end of this week with the big banks set to report starting Friday. In the more immediate term, Albertson’s is scheduled to report its quarterly results before the bell Tuesday.

It’s a big week in economic data as well, including key inflation data. On Tuesday Federal Reserve Chairman Jerome Powell’s confirmation hearing will take place. Kansas City Fed President Esther George is also scheduled to speak about on economic policy, as is St. Louis Fed president James Bullard later in the day.