By Caitlin McCabe and Anna Hirtenstein
U.S. stocks fell Tuesday in a choppy trading session as
investors again pulled back from riskier assets amid a continuing
stretch of volatility in both bonds and stocks.
Financial markets have seesawed in recent days as investors have
tried to make sense of a sharp and swift rise in bond yields. On
Monday, it seemed, some of those jitters about rising interest
rates had subsided, propelling the S&P 500 to its best day in
nearly nine months.
Yet by Tuesday, much of that optimism had stalled, sending all
three major stock indexes lower, with technology stocks in
particular dragging them down. The S&P 500 lost 31.53 points,
or 0.8%, to 3870.29, while the Nasdaq Composite tumbled 230.04
points, or 1.7%, to 13358.79.
The Dow Jones Industrial Average, meanwhile, fell 143.99 points,
or 0.5%, to 31391.52.
Investors in recent weeks have been carefully watching the yield
on the benchmark 10-year U.S. Treasury note, which has moved up
rapidly in 2021, rattling a stock market that has posted
near-continuous gains since the coronavirus-induced selloff of last
year. All three indexes finished the last week of February lower as
investors retreated from stocks while they weighed the implications
of higher rates.
On Tuesday, the yield on the 10-year U.S. Treasury note fell to
1.413%, from 1.444% Monday, a drop that marked three consecutive
sessions of declines. Even so, it wasn't enough to appease stock
investors.
Driving some of the retreat from stocks is a concern that the
fast rise in rates may prompt the U.S. Federal Reserve to begin
tightening monetary policy sooner than expected -- a fear that Fed
officials have tried to allay recently. Fed Chairman Jerome Powell
told members of Congress last week that the central bank will
continue to maintain low interest rates and continue asset
purchases until more progress has been made on its employment and
inflation goals.
Those commitments were reiterated Tuesday by Federal Reserve
Gov. Lael Brainard, who similarly said the economy remains far from
the central bank's goals. As concerns about inflation have swelled
among investors, she also noted that "a burst of transitory
inflation seems more probable than a durable shift above target in
the inflation trend and an unmooring of inflation expectations to
the upside."
"There's going to be a tug of war between better economic data,
better earnings data and Fed policy" for the foreseeable future,
said Keith Lerner, chief market strategist at Truist Advisory
Services.
"Because the Fed has played such a large role in market
recovery, investors are sensitive" to even the perception that
monetary policy could change, he added.
Shares of technology companies were among those that tumbled
Tuesday, continuing a trend that began last month, in part, because
technology stocks are particularly sensitive to rising rates. The
selloff in the sector has also caused some investors to re-evaluate
their positioning and spurred some to hunt instead for deals in
cyclical stocks.
The S&P 500's materials sector finished Tuesday as the only
one of the index's 11 groups to end higher, rising 0.6%. The
information technology sector, in contrast, suffered the steepest
decline of the groups, losing 1.6%.
Among individual stocks, Apple lost $2.67, or 2.1%, to close at
$125.12. Twitter dropped $3.96, or 5.1%, to $73.67. And Microsoft
lost $3.07, or 1.3% to $233.87.
Still, there were bright spots in the market: Payments company
Square climbed $11.20, or 4.7%, to $252.20 after it said its
industrial bank has begun operating.
And companies that tumbled sharply during last year's market
rout also surged. Cruise line Carnival added $1.28, or 4.9%, to
$27.59, while American Airlines Group added 26 cents, or 1.2%, to
$21.44. Investors and analysts expect an increase in consumer
demand for travel services once larger swaths of the population
receive the Covid-19 vaccine.
"We're absolutely seeing a shift toward value" in stock markets,
said Fahad Kamal, chief investment officer at Kleinwort Hambros.
"European equities are beneficiaries of this, a lot of major
companies are value linked."
In overseas markets, the pan-continental Stoxx Europe 600 added
0.2%.
In Asia, most major benchmarks finished the day down. China's
Shanghai Composite Index and Hong Kong's Hang Seng both fell 1.2%.
South Korea's Kospi Index rose 1%, buoyed by the prospect of a new
pandemic relief spending package.
Meanwhile, in commodities, futures on Brent crude oil, the
global benchmark, fell 1.6% to $62.70 a barrel, ahead of a planned
Thursday meeting of the Organization of the Petroleum Exporting
Countries and its partners.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Anna
Hirtenstein at anna.hirtenstein@wsj.com
(END) Dow Jones Newswires
March 02, 2021 17:14 ET (22:14 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.