News: Growth stocks push Nasdaq, S&P 500 lower as rising yields weigh.
(Reuters) – The S&P 500 and Nasdaq indices came under pressure on Monday as rising government bond yields and the prospect of rising inflation sparked valuation concerns and hit the stocks of soaring growth companies.
Federal Reserve Chairman Jerome Powell is expected to address the Senate Banking Committee Tuesday, and investors are expected to look for possible changes in the Fed’s cautious outlook in recent months.
Shares in Apple Inc, Microsoft Corp, Facebook Inc, Alphabet Inc, Tesla Inc, Netflix Inc and Amazon.com Inc resumed their slide from the previous week, falling between 0.7% and 5%.
A broadly bullish fourth quarter result had pushed Wall Street major indices to record highs early last week, but the rally lost momentum on fears that a number of stimulus measures could stall nationwide vaccination efforts and inflation concerns.
“There is little new money on the market. It’s like everyone has bought in and at some point there is exhaustion from the shopper and the market tends to subside a little, “said David Keller, chief marketing strategist at StockCharts.com.
“The market recognizes the general euphoric sentiment that we had.”
The 10-year benchmark return barely changed on Monday, but it was 1.394% overnight, its highest level since February 2020.
The S&P 500 fell 21.41 points, or 0.55%, to 3,885.30, a five-day loss, its worst in a year.
Value stocks outperformed growth stocks in February, with investors betting on a rebound in industrial activity and a pickup in consumer demand as countries introduce vaccines to tame the pandemic.
The industrial and financial sectors of the S&P 500 rose 1.0% each, while energy stocks rose 4.3% due to higher oil prices.
At 12:04 p.m. ET, the Nasdaq Composite fell 234.03 points, or 1.69%, to 13,640.44, while the Dow Jones Industrial Average rose 29.43 points, or 0.09%, to 31,523.75, and Walt Disney Co. increased the blue chip index.
Discovery Inc was up 9.2% after the media company announced it expected 12 million paid streaming subscribers worldwide by the end of February as coronavirus-induced restrictions kept people at home.
Kohl’s Corp was up 9.4% after a group of activist investors named nine directors to the chain’s board of directors.
Principal Financial Group Inc was up 8.9% after a media report reported that activist investor Elliott Management Corp had acquired a stake in the life insurance company and intended to push for changes.
Progressive issues outperformed declines by a ratio of 1.01 to 1 on the NYSE. Declining issues were more numerous than advanced traders at a ratio of 1.18 to 1 on the Nasdaq.
The S&P index made 59 new 52-week highs and no new low, while the Nasdaq made 218 new highs and seven new lows.
Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Adaptation by Anil D’Silva and Shounak Dasgupta
Original Source © Reuters