News: Wall Street falls as growth stocks slide; inflation concerns, rising yields weigh.
(Reuters) – US equity indices fell Monday as rising government bond yields and rising inflation prospects sparked valuation concerns and hit the stocks of soaring growth companies.
Shares in Apple Inc, Microsoft Corp, Facebook Inc, Alphabet Inc, Tesla Inc, Netflix Inc and Amazon.com Inc resumed a decline from the previous week, falling between 0.6% and 2.1% in early trading.
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.
“Because investors are anticipators, they are now preparing for a possible spike in inflation,” said Sam Stovall, CFRA Research’s chief investment strategist.
“Most growth stocks benefit from falling interest rates. If interest rates are expected to rise, it would decrease the intrinsic value of growth stocks. “
The yields on 10-year Treasury notes have already reached 1.38%, above the psychological level of 1.30%. [MKTS/GLOB]
Federal Reserve Chairman Jerome Powell is likely to reaffirm his commitment to keep politics super simple for as long as necessary in his semi-annual testimony to Congress this week.
Cyclical stocks have recently benefited from a rotation of technology-related stocks in hopes that once the COVID-19 pandemic is over, they can take advantage of pent-up demand.
The S&P 500 financial sector was up 0.2% while energy stocks rose 2.2% on higher oil prices. Nine of the eleven major S&P 500 sectors were in negative territory.
Value stocks outperformed growth stocks in February, with the S&P 500 Value Index gaining three straight weeks this month, while the S&P 500 Growth Index lost 1.7% last week.
At 9:46 a.m. ET, the Dow Jones Industrial Average fell 142.78 points, or 0.45%, to 31,351.54, the S&P 500 fell 23.54 points, or 0.60%, to 3,883.17, and the Nasdaq Composite by 165.59 points or 1.19% at 13,708.88.
Boeing Co fell 2% after showering engine parts over residential areas on both sides of the Atlantic attracted regulatory attention and resulted in the retirement of some older aircraft.
The incidents have also put the engine maker Pratt & Whitney in the spotlight. Shares in owner Raytheon Technologies Corp were down 1.8%.
Discovery Inc was up 6.2% 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 surged 5.7% after a group of activist investors named nine directors to the department store chain’s board of directors.
Principal Financial Group Inc rose 8.3% after media reports that activist investor Elliott Management Corp had acquired a stake in the life insurance company and intended to press for changes.
With a ratio of 1.28 to 1 on the NYSE and a ratio of 1.72 to 1 on the Nasdaq, the declining issues outnumbered them.
The S&P index made 35 new 52-week highs and no new low, while the Nasdaq made 110 new highs and three new lows.
Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Adaptation by Anil D’Silva and Shounak Dasgupta
Original Source © Reuters