Stock Market
Tech Shares Tumble a Second Day as Yields Climb: Markets Wrap
Tech Shares Tumble a Second Day as Yields Climb: Markets Wrap
Technology shares sold off for a second day amid growing concerns that valuations for high-flying stocks are stretched as interest rates rise and the global economy moves closer to reopening.
The Nasdaq 100 slumped more than 2% as the tech-heavy gauge headed to its longest losing streak since 2019. Tesla Inc. dropped as much as 13% as investors continued to punish stocks that have led the rally from the depths of the pandemic a year ago. Cyclical shares set to benefit from the end of pandemic lockdowns outperformed, limiting losses for the Dow Jones Industrial Average. A similar rotation was underway in European stocks.
So-called growth shares are having their worst month against value counterparts in more than two decades as vaccination campaigns gather pace and bond yields climb. Bets on faster growth and higher rates have pushed the gap between 5- and 30-year yields to the highest level in more than six years.
Investors are growing concerned that broad equity benchmarks have already priced in much of the prospective global recovery spurred by vaccines and U.S. stimulus.
“We’re starting to see some people take some money off the table,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “The side of the market that has been so overvalued for so long is the tech side and those bigger growth names, so we’re seeing some rotation.”
Federal Reserve Chairman Jerome Powell signaled that the central bank was nowhere close to pulling back on its support for the pandemic-damaged U.S. economy even as he voiced expectations for a return to more normal, improved activity later this year.
“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” he said in the text of testimony to be delivered Tuesday to the Senate Banking Committee.
Elsewhere, stocks in Asia were mostly higher. Bitcoin retreated below $50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s rally.
Some key events to watch this week:
- EIA crude oil inventory report is out Wednesday.
- Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
- The S&P 500 Index declined 1.2% as of 10:02 a.m. New York time.
- The Stoxx Europe 600 Index fell 1%.
- The MSCI Asia Pacific Index fell 0.2%.
- The MSCI Emerging Market Index fell 0.6%.
Currencies
- The Bloomberg Dollar Spot Index gained 0.1%.
- The euro fell 0.1% to $1.215.
- The British pound rose 0.1% to $1.4077.
- The Japanese yen weakened 0.3% to 105.38 per dollar.
Bonds
- The yield on 10-year Treasuries rose two basis points to 1.38%.
- Germany’s 10-year yield jumped five basis points to -0.29%.
- Britain’s 10-year yield rose seven basis points to 0.75%.
Commodities
- West Texas Intermediate crude fell 0.4% to $61.50 a barrel.
- Gold fell 0.5% to $1,800.96 an ounce.