Technology stocks are pulling the S&P 500, Nasdaq mix

The decline in technology stocks dragged down major U.S. stock indices on Thursday, with the Nasdaq compound closing at its lowest level since October.

Technology stocks are under pressure in the new year as yields on government securities soar. Higher yields will reduce the attractiveness of future returns promised by many technology stocks.

The S&P 500 was down 67.32 points, or 1.4%, at 4659.03. The Dow Jones Industrial Average was down 176.70 points, or 0.5%, at 36113.62. The Tech-Heavy Nasdaq Composite was down 381.58 points, or 2.5%, at 14806.81.

Largest U.S. stocks Helped pull the market down

Apple

The stock is down $ 3.34 or 1.9% to $ 172.19, and

Microsoft

The stock is down $ 13.47 or 4.2% to $ 304.80.

The technology sector fell 2.7%, making it the worst-performing group in the S&P 500. The decline brought the technology sector’s year-to-date losses to 5.6%.

The yield on the benchmark 10-year U.S. Treasury note fell to 1.708% on Thursday from 1.724%. This is higher than the 1.496% that ended in 2021. Bond yields increase when prices fall.

When the yields on long-term securities are high, “you tend to revalue those growth stocks,” said Tom Heinlin, national investment strategist at US Bank Wealth Management. “If you increase that interest rate, it puts pressure on the current value of those companies.”

Business Is stumbling In recent days investors are considering the forward path of stocks. S&P 500, this Increased by 27% last year, Down 2.2% so far in 2022.

Investors are closely watching any developments that could affect the Federal Reserve’s calculations about tightening monetary policy. To deal with inflation. Federal Reserve officials have signaled that interest rates may rise in March. Central Bank’s James Bullard said Wednesday There may be four hikes in 2022.

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Federal Reserve Governor Lale Brinard

Told Congress Efforts to reduce inflation on Thursday are the central bank’s “most important task.” Ms. Brinard is a White House nominee to serve as the No. 2 official of the Central Bank.

“Our monetary policy is focused on reducing inflation to 2%, while maintaining an all – inclusive recovery,” Ms Brinard said.

“The main story is the market view of the next steps of the central bank. The market is balancing two things: less support from monetary policy, but overall the overall economy is doing well, and we expect the earnings figures to be emerging now to be very strong, ”said Luke Philip, Investment Chairman, SYZ Pvt. Banking.

Shares have mostly risen this week.


Photo:

Brendan MCDERMID / REUTERS

Investors on Thursday examined data showing it Filing for unemployment claims increased For the 230,000 seasonally adjusted last week, it was higher than economists expected. A tight U.S. labor market has had a pre-epidemic low of applications for the past two months.

Other data showed signs of a possible easing of inflationary pressures on the US supply chain. The Department of Labor said Its producer price index rose 0.2% in December The slowest pace since the previous month, after November 2020.

“The fact that inflation is likely to peak this quarter fits a big story,” said Jack Uplin, Cresset Capital’s corporate partner and chief investment officer.

The earnings season begins this week, including major financial institutions

Black rock,

Citigroup,

JPMorgan

And

Wells Fargo

Announced on Friday. Investors are on the edge Jeffrey’s Financial Group’s Jeffrey Myers, a market securities adviser, said on Wednesday after it released earnings and earnings that missed analysts’ ratings.

According to FactSet, analysts expect companies’ profits in the S&P 500 to rise 22% in the fourth quarter over the previous year.

Among individual stocks, Stocks

Delta Airlines

86 cents or 2.1% to $ 41.47, the airline’s chief executive said, adding that although the company reported a quarterly loss, it expects to recover soon. Effects of the Omicron variant. Shares of homebuilder KB Home rose $ 7.00, or 17%, to $ 49.38, well above analysts’ expectations.

Jerome Powell said in a confirmation inquiry for his second term as head of the Federal Reserve that the central bank will use its tools to reduce inflation. Photo: Graeme Jennings / Press Pool

Overseas, the Pan-Continental Stoxx Europe 600 fell less than 0.1%.

In Asia, most key criteria fell. The Shanghai Composite Index lost 1.2% on concerns over China’s recent Kovit-19 eruption after the port city of Tianjin reported more epidemics. Japan’s Nikkei 225 was down 1%.

Kenting Hong Kong,

A shipping operator, fell 56%. Stock trading resumed on Thursday, with a German subsidiary filing for bankruptcy, triggering a default.

Write to Karen Langley at [email protected] and Anna Hirtenstein at [email protected]

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