Nasdaq set to open at record high ahead of business activity data

The Nasdaq 100 index was set to open at a record high on Wednesday with investors razor focused on business activity data after Federal Reserve officials sought to calm fears of a sharp tapering of monetary stimulus.

Tech-heavyweights Facebook, Apple Inc, Amazon.com, Nvidia and Microsoft Corp edged higher in premarket trading.

Microsoft also became the second U.S. firm to cross $2 trillion in market capitalization.

IHS Markit’s flash reading on manufacturing and services PMI data, due at 9:45 a.m., is expected to show a slight easing in business activity this month, compared with May.

In a hearing before a U.S. House of Representatives panel, Fed Chair Jerome Powell reiterated that the central bank will not raise interest rates too quickly on inflation fears alone and will encourage a “broad and inclusive” recovery of the job market.

Powell’s comments follow the Fed’s projection of an increase in interest rates as soon as 2023, sooner than anticipated which sparked a sharp profit booking in the so called “reflation” stocks and triggered a move into tech-heavy growth names.

However, market participants have swung between value and growth stocks this week, with the Nasdaq notching a record close on Tuesday, lifted by strong gains in top-shelf tech companies.

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“Equities have come back up to all-time highs and that tells you the market is shrugging off the communication from the Fed,” said Johan Grahn, vice president and head of ETF Strategy at AllianzIM in Minneapolis.

“Powell has planted a seed of tapering the Fed is paving a way for more discussions around tapering itself and that, coupled with where they talk about rates next time, is going to build some volatility into markets.”

The S&P growth index has risen 3.9% in June, closing the gap with its value counterpart, which has fallen 2% this month but is still up more than 14% on the year.

At 8:24 a.m. ET, Dow e-minis were up 61 points, or 0.18%, S&P 500 e-minis were up 4.5 points, or 0.11%, and Nasdaq 100 e-minis were up 16 points, or 0.11%.

Rate-sensitive Goldman Sachs, JPMorgan Chase & Co, Morgan Stanley and Bank of America added between 0.4% and 0.6%.

Energy stocks Occidental Petroleum Corp, ConocoPhillips and Exxon Mobil rose in the range of 0.6% and 1.4% as oil prices jumped to a more than two-year high.

Among so-called meme stocks, software firm Alfi Inc dropped 10% after more than doubling in value in the prior session, while Torchlight Energy Resources Inc slumped 15% for the second day after announcing an upsized stock offering.

(Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Maju Samuel)