Falling Tech Stocks Weigh on Major Indexes
May 17 2021 - 12:02PM
Dow Jones News
By Joe Wallace and Alexander Osipovich
U.S. stocks fell Monday, dragged down by declines among
technology shares, following a week in which concerns about
inflation whipsawed markets.
The Dow Jones Industrial Average fell 142 points, or 0.4%, in
late-morning trading. The S&P 500 dropped 0.5%, while the
tech-heavy Nasdaq Composite declined 0.7%.
With earnings season drawing to a close, investors remain
focused on whether a recent jump in inflation will blow over or
become entrenched. A protracted spell of faster growth in consumer
prices could prompt the Federal Reserve to tighten monetary policy,
potentially hurting stocks and other assets that have gained from
low interest rates.
Those concerns last week led the S&P 500 to post its biggest
decline since late February, even after staging a rebound Friday.
Highflying tech stocks have been particularly vulnerable to worries
about inflation: The Nasdaq has fallen for four straight weeks, its
longest losing streak since August 2019.
"We see this as transitory, but you never know: there is stuff
in here that could take a bit longer," said Lars Skovgaard
Andersen, investment strategist at Danske Bank Wealth Management.
"There will be some volatility in markets still."
Quickening inflation has sharpened focus on statements by Fed
officials, who have made the case that the pickup will fade,
allowing the central bank to keep supporting the economy.
One member of the Fed's rate-setting committee, Federal Reserve
Bank of Atlanta President Raphael Bostic, said Monday that he
wasn't ready for the central bank to dial back its support for the
economy. Speaking on CNBC, Mr. Bostic downplayed concerns about
price increases and said it could take months to get a good reading
on inflation.
Gold, a traditional hedge against inflation, posted gains.
Futures on the precious metal rose 1.4% to $1,864 a troy ounce, on
track for their highest settle in more than three months. Money has
started to flow back into the SPDR Gold Trust, the biggest
gold-backed exchange-traded fund, this month.
Technology was the worst-performing sector of the S&P 500 on
Monday. Apple and Microsoft were both down more than 1%, while
Tesla fell 2.2%.
In corporate news, AT&T shares rose 1.8% after the telecom
giant agreed with Discovery to combine the two companies' media
assets into a new, publicly traded company. AT&T would receive
$43 billion under the deal.
Class A shares of Discovery were recently down 2%, after jumping
more than 11% after the opening bell.
Bitcoin dropped more than 10% over the weekend to around $44,300
after a tweet by Tesla Chief Executive Elon Musk prompted
speculation that the electric-car maker had sold, or would sell,
its holdings of the cryptocurrency. Mr. Musk later tweeted that
Tesla hadn't sold any bitcoin.
In the bond market, the yield on 10-year Treasury notes ticked
up to 1.640%, from 1.639% on Friday.
Overseas, the Stoxx Europe 600 was roughly flat in recent
trading. Chinese stocks rose after data showed the nation's
industrial output jumped 9.8% year-over-year in April, beating
forecasts, while retail sales rose by a lower-than-expected 17.7%.
The Shanghai Composite Index advanced 0.8%.
In Taiwan, the benchmark Taiex fell 3%, building on a pullback
of more than 8% last week. Over the weekend, authorities
implemented more restrictive measures to combat Covid-19 amid a
spike in new local infections, and on Monday Taiwan reported a
record high of 333 new local cases.
Japan's Nikkei 225 lost 0.9%.
Chong Koh Ping in Singapore contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Alexander
Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
May 17, 2021 11:47 ET (15:47 GMT)
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