Stock market news live updates: Stock futures open flat after Dow hits record - Yahoo Finance

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Stock futures traded flat Wednesday evening following a mixed session on Wall Street, with performance between the Dow and Nasdaq diverging as investors weighed concerns over inflation and higher rates that might drag on growth stocks.

Contracts on the Dow opened little changed after the index hit record intraday and closing highs during the regular session. Contracts on the Nasdaq also drifted, after the index fell 0.4% for its fourth straight day of losses – its longest losing streak since October.

So far in May, investors renewed a rotation away from technology and growth stocks, with valuations viewed as stretched especially as prospects for rising rates increase. And given the strong stock market rally over the past year, some have worried that easy positive catalysts for equities may be running out, with the economic recovery already well under way and a strong earnings season almost in the rearview mirror. Recent Bank of America data showed that institutional clients sold equities for a third week in a row last week, and hedge fund clients posted their largest outflows in over a month as equity sentiment nears euphoria.

Many market participants are now considering whether the strength of the economic rebound and surge in consumer and business demand will lead to persistently high levels of inflation, prompting officials to ease up on the ultra-accommodative policies that had supported both the economy and asset prices. Private payrolls accelerated to rise by 742,000 in April, ADP reported Thursday, and Friday's jobs report from the Labor Department is expected to show a staggering nearly 1 million non-farm payrolls returned last month.

"The question that matters the most is if asset managers will make a significant change in allocations to express an increased probability of a more persistent inflation," Marko Kolanovic, JPMorgan global markets strategist, wrote in a note. "We think that this shift in allocation will happen (regardless of how temporary inflation is), and new data points related to inflation will on margin cause investors to shorten duration, move from low volatility to value, and increase allocations to direct inflation hedges such as commodities."

"We expect this trend to persist during the reopening of global economies in the second half of this year," he added. "Given the still high unemployment, and a decade of inflation undershoot, central banks will likely tolerate higher inflation and see it as temporary. Portfolio managers likely will not take chances and will reposition portfolios."

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