News: S&P 500, Nasdaq slip as bond yields rise.
NEW YORK (Reuters) – The S&P 500 slid on Friday after hitting an all-time high in the previous session as rising US bond yields revived inflation worries and clouded the appeal of high-growth tech stocks.
The tech-heavy Nasdaq fell after rising more than 6% in the last three sessions, while the blue-chip Dow hit its fifth record high in a row.
Wall Street major indices are set to their best week in five after President Joe Biden signed one of the largest US stimulus packages on Thursday, and the data has bolstered the prospect that the economy is on the path to recovery.
A steady rise in US Treasury bond yields has raised fears of a sudden weakening of monetary stimulus and has put major US equity indices under pressure in recent weeks.
The return on the 10-year benchmark note was 1.642%, its highest level since February last year. [US/]
The Dow and Nasdaq split reflects an ongoing tech sell-off as investors buy cyclical and undervalued value stocks that are expected to do well when the economy rebounds.
In order to Tech- Shares can continue to thrive and require low interest rates and slower growth, said Thomas Hayes, chairman and executive director of Great Hill Capital LLC hedge fund.
But with the stimulus package, the economy is likely to grow 7% to 9% this year and put pressure on interest rates, he said.
“That’s why interest rates are rising today because the reopening is happening faster and stronger than expected. And then value, cyclicals and economically sensitive stocks outperform, ”said Hayes.
The rapid distribution of vaccines and increased tax subsidies have raised concerns about rising inflation, despite assurances from the Federal Reserve that it will maintain accommodative policies. All eyes will be on the central bank policy meeting next week for more clues about inflation.
US consumer sentiment improved to its strongest level in a year in early March, according to a University of Michigan poll on Friday.
At 2:22 p.m. EST, the Dow Jones Industrial Average rose 228.31 points, or 0.7%, to 32,713.9, the S&P 500 rose 7.12 points, or 0.18%, to 3,932.22, and the Nasdaq Composite rose 144 , 70 points or 1.08%. to 13,253.98.
The Nasdaq has been particularly hard hit by the sell-off in recent weeks and confirmed a correction earlier in the week as investors swapped highly valued technology stocks for stocks in energy, mining and industrial companies poised to benefit more from an economic rebound.
Value stocks rose about 0.6%, while growth stocks fell 1.1% in continuation of a rotation that began late last year.
The soaring but yield sensitive group of stocks including Facebook Inc, Apple Inc, Amazon.com Inc, Netflix Inc, Google parent Alphabet Inc, Tesla Inc and Microsoft Corp, which fueled last year’s rally, all fell.
Tech communications services and consumer discretionary indices, which include these mega-cap stocks, were the worst performers among the major S&P sectors.
The banking index rose 1.2% while financials and industrials hit new record highs.
Ulta Beauty Inc slumped about 8% after the cosmetics retailer forecast annual sales below estimates as demand for makeup products came under pressure due to expanded work-from-home guidelines.
US-listed shares of China-based JD.com Inc fell 7% after three sources said it was in talks to buy some or all of its stake in brokerage Sinolink Securities worth at least $ 1.5 billion.
Declining issues outperformed advancing issues on the NYSE by a ratio of 1.10 to 1; A ratio of 1.25 to 1 favored declines on Nasdaq.
The S&P 500 posted 77 new 52-week highs and no new lows. The Nasdaq Composite made 375 new highs and 12 new lows.
Reporting by Herbert Lash in New York; Additional coverage from Medha Singh, Shashank Nayar and Sagarika Jaisinghani in Bengaluru; Adaptation by Maju Samuel and Matthew Lewis
Original Source © Reuters