Tech companies led a wide stock plunge on Wall Street and bond yields rose again on Monday as investors anticipate the next corporate earnings season and what it will reveal about the impact of inflation on business profits.
The S&P 500 fell 1.7%, adding to its recent losses. The Dow Jones Industrial Average fell 1.2% and the tech-heavy Nasdaq fell 2.2%. The benchmark S&P 500 and the Nasdaq just suffered their first weekly losses in four weeks. The Australian stock market is expected to experience a negative start to the session, with futures at 6:59 a.m. AEST showing a drop of 22 points, or 0.3%, at the open.
Bond yields rose. The 10-year Treasury yield climbed to 2.78% from 2.71% on Friday night. Bonds rose amid expectations of higher interest rates as the Federal Reserve moves to stifle inflation.
The market “always reacts to what’s happening in the bond market,” said Willie Delwiche, investment strategist at All Star Charts. “You’ve got yields, not just in the US but around the world, rising sharply and that’s putting pressure on (equities) in general. That was the story for the past week, and that’s the story. story of this week.
Higher rates hurt all types of investments, especially stocks considered the most expensive, like those of big tech companies. As bonds offer better returns for less risk, it makes expensive stocks less attractive, which is why the biggest selloffs have been in tech and other growth stocks as inflation fears have rattled the market.
Tech stocks were again the most important in the market on Monday. Microsoft fell 3.9% and Apple 2.6%.
All 11 sectors of the S&P 500 fell. The index ended down 75.75 points at 4,412.53. The Dow lost 413.04 points to 34,308.08, while the Nasdaq slipped 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%, to 1,980.32.
Energy stocks were among the biggest losers as they tracked lower oil prices. U.S. crude oil prices fell 4% and Occidental Petroleum fell 3.9%, the biggest drop in the S&P 500.
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