Stock futures are slightly higher after rising rates hit tech stocks

U.S. stock index futures inched higher during overnight trading on Wednesday, after tech stocks dipped again as investors digest the impact from higher rates.

Futures contracts tied to the Dow Jones Industrial Average gained 81 points, or 0.24%. S&P 500 futures advanced 0.24%, while Nasdaq 100 futures gained 0.24%.

The Dow and S&P 500 inched higher during regular trading. The 30-stock Dow advanced about 90 points for its fifth positive session in the last six, while the S&P 500 gained 0.16%, breaking a 2-day losing streak.

The Nasdaq Composite, meanwhile, declined 0.24% for its fourth straight negative session. The technology sector declined again on Wednesday and is now down 4% for the week, making it the worst-performing S&P group.

The tech decline came as the 10-year Treasury yield hit a high of 1.56% on Wednesday, after rising to 1.567% on Tuesday. The move higher is pressuring tech stocks since it makes promised future cash flows look less attractive.

Investors are also monitoring the latest headlines out of Washington. On Wednesday the House passed a bill that would suspend the U.S. debt ceiling after Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi on Tuesday that Congress had until Oct. 18 to raise or suspend the debt ceiling.

However, Republicans in the Senate have said they will reject the legislation.

“While the political dynamics remain uneven, we think that US debt ceiling negotiations will succeed in time and a US government shutdown can be avoided,” UBS said Tuesday evening in a note to clients. “Overall, our base case still envisions solid economic growth and a gradual tightening of monetary conditions,” the firm added. Based on these projections, UBS advises investors to favor equities over bonds.

All of the major averages are firmly in the red for the week. The Dow is on track for its fourth negative week in the last five, while the S&P and Nasdaq Composite are on track for their worst weeks since February.

Wells Fargo noted that pullbacks are to be expected. “This is a normal re-pricing of risk based on a higher cost of capital and greater market uncertainty,” the firm said Wednesday in a note to clients.

On the data front, initial jobless claims for the prior week will be released. Economists are expecting a print of 335,000. The Bureau of Economic Analysis will also release its third estimate for Q2 GDP on Thursday.

When it comes to earnings, Bed Bath & Beyond will report quarterly results before the market opens.