- US yields consolidate to 3-year highs
- Rate-sensitive growth stocks lead to a decline
- Indices down: Dow 0.15%, S&P 0.75%, Nasdaq 1.07%
April 11 – The Nasdaq fell more than 1% on Monday, leading Wall Street’s main indices lower as rising bond yields weighed on megacap stocks like Microsoft and Apple and investors were nervous ahead of Tuesday’s inflation data.
Microsoft Corp (MSFT.O), Apple Inc (AAPL.O) and Nvidia Corp (NVDA.O) shares fell between 1.9% and 4.1% as the benchmark 10-year Treasury yield fell to 2 .75% climbed after hitting a fresh three-year high earlier in the day.
The S&P 500 technology index (.SPLRCT) fell 1.9%, the strongest of the 11 major S&P sectors, while the Philadelphia semiconductor index (.SOX) fell 1%.
Market-leading growth and technology stocks, buoyed by record-low interest rates, have come under pressure since late March after the US Federal Reserve signaled it would aggressively hike interest rates to curb rising inflation. Continue reading
Data on Tuesday is expected to show that US consumer prices rose to a new four-decade high of 8.5%y/y in March, after hitting 7.9% in February as the Ukraine conflict hit the country drives up energy costs.
“The problem for stocks gaining momentum right now is that it’s really unclear where inflation will peak,” said Eric Merlis, managing director of global markets at Citizens Financial Group.
“If we thought the Fed had inflation under control and the war would stop spilling over into Europe, you would see a pretty compelling rally in growth stocks. But we’re not there.”
Electric carmaker Tesla Inc (TSLA.O) fell 2.1% after data showed auto sales in China slumped in March, hurt by the country’s restrictions to contain COVID-19 outbreaks. Continue reading
Nvidia fell 4.0% after Baird downgraded the chipmaker. Chip stocks (.SOX) have been among the worst victims of the tech sell-off, falling 22% so far this year compared to the Nasdaq (.IXIC)’s 13.5% decline.
Investors are also focusing on the major US banks, which start the reporting season for the first quarter on Wednesday. They are expected to show a sharp year-over-year decline in quarterly earnings. Continue reading
However, the prospect of higher interest rates boosted financials, with the S&P 500 Banking Index (.SPXBK) rising 1.7%.
The S&P 500 Value Index (.IVX), which includes banking and energy stocks, has outperformed its growth counterpart (.IGX) so far this year, with the former remaining nearly flat while the growth index is down 13%.
At 10:13 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 52.55 points, or 0.15%, to 34,668.57, the S&P 500 (.SPX) was down 33.61 points, or 0.75% 4,454.67 and the Nasdaq Composite (.IXIC) fell 146.94 points, or 1.07%, to 13,564.06.
Twitter Inc (TWTR.N) rose 2.8%, reversing all premarket losses after the social media company said Tesla CEO Elon Musk turned down his offer to join the company’s board. Continue reading
Media and streaming company Warner Bros Discovery Inc (WBD.O), formed from the $43 billion merger of Discovery Inc and AT&T Inc (TN) assets, rose 3.6 in the first day of trading %. AT&T shares gained 5.0%. Continue reading
At a 1.23 to 1 ratio on the NYSE and a 1.26 to 1 ratio on the Nasdaq, bearish issues outweighed the leaders.
The S&P index posted 31 new 52-week highs and eight new lows, while the Nasdaq made 24 new highs and 205 new lows.
Reporting by Bansari Mayur Kamdar and Praveen Paramasivam in Bengaluru; Edited by Shounak Dasgupta