Technology companies led a broad slide for stocks on Wall Street and bond yields rose again on Monday as investors look ahead to the upcoming company earnings reporting season and what it will reveal about the impact inflation is having on corporate profits.
The S&P 500 fell 1.7 per cent, adding to its recent losses. The Dow Jones Industrial Average fell 1.2 per cent and the tech-heavy Nasdaq slid 2.2 per cent. Both the benchmark S&P 500 and the Nasdaq are coming off their first weekly losses in four weeks. The Australian sharemarket is set for a negative start to the session, with futures at 6.59am AEST pointing to a fall of 22 points, or 0.3 per cent, at the open.
Tech giants have pushed Wall Street’s benchmark index lower.Credit:AP
Bond yields rose. The yield on the 10-year Treasury climbed to 2.78 per cent from 2.71 per cent late Friday. Bonds have been rising amid expectations of higher interest rates as the Federal Reserve moves to squelch inflation.
The market “is still reacting to what’s happening in the bond market,” said Willie Delwiche, investment strategist at All Star Charts. “You have yields, not just in the US but around the world, moving sharply higher and that’s putting pressure on (stocks) generally. That was the story last week, and it’s the story this week.”
Higher rates hurt all kinds of investments, particularly stocks that are seen as the most expensive, such as those of Big Tech companies. As bonds offer better returns for less risk, that makes pricey stocks less attractive, which is why the heaviest selling has been concentrated in technology and other growth stocks as inflation fears have rattled the market.
Technology stocks were again the biggest weights on the market Monday. Microsoft fell 3.9 per cent and Apple shed 2.6 per cent.
All 11 sectors in the S&P 500 fell. The index ended down 75.75 points to 4,412.53. The Dow lost 413.04 points to 34,308.08, while the Nasdaq slid 299.04 points to 13,411.96.
Small company stocks held up better than the rest of the market. The Russell 2000 fell 14.24 points, or 0.7 per cent, to 1,980.32.
Energy stocks were among some of the biggest losers as they followed oil prices lower. US crude oil prices fell 4 per cent and Occidental Petroleum slumped 3.9 per cent, the biggest decliner in the S&P 500.
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