Stocks Decline for Second Straight Day
By Will Horner
U.S. stocks slumped Wednesday as technology stocks continued
falling and government bond yields ticked higher.
The S&P 500 fell 0.5%. The Nasdaq Composite fell 1%,
pointing to declines in technology stocks for a second day. The Dow
Jones Industrial Average edged down less than 0.1%.
The yield on the 10-year U.S. Treasury bond ticked up to 1.476%,
from 1.413% on Tuesday. That is still down from the 1.513% it hit
last month. Yields rise when bond prices fall.
Stocks have been jittery in recent days, with the major indexes
wavering daily between losses and gains. Some money managers have
grown concerned that stimulus measures will lead to a spike in
inflation and erode the value of bond returns. Worries about
inflation have also triggered bets that the Federal Reserve may
start to boost interest rates in the next two years.
Top central bank officials have said the rise in yields reflects
optimism about economic prospects and that they plan to keep
monetary policy loose to support the economy for the foreseeable
future. Federal Reserve Gov. Lael Brainard said Tuesday that the
recent tumult in the bond market is on her radar. She said she
would be concerned if she "saw disorderly conditions or persistent
"This higher volatility is to be expected," said Seema Shah,
chief strategist at Principal Global Investors. "What has taken us
unawares is the timing of it because most people were expecting to
see these issues come later in the year, or early next year."
Sentiment was briefly buoyed earlier in the day by signals that
Democrats will seek to bridge differences over jobless benefits and
other issues as they aim to complete a $1.9 trillion relief package
in coming days. Mr. Biden also said the U.S. would have enough
Covid-19 vaccines for all American adults by the end of May, two
months earlier than he had previously said.
"The vaccine rollout is going extremely well compared to many
expectations," said Mrs. Shah. "And at a time when it looks like
the economy could recover on its own, we also have the prospect of
fiscal stimulus in the background, and it is leading many people to
upgrade their U.S. growth expectations."
Optimism about the better economic prospects is particularly
fueling demand for shares in companies that would benefit when the
economy returns to normal, said Chris Dyer, director of global
equities at Eaton Vance. That includes banking and energy stocks,
which are outperforming the technology sector this year.
"We can see light at the end of the tunnel of the pandemic," Mr.
Dyer said. "The progress that has been made on vaccinations has led
to confidence in the economic recovery and you have seen companies
geared into that economic recovery do well in the last months."
Ms. Brainard on Tuesday signaled that the Federal Reserve won't
dial back support for the economy until it is on a stronger
footing, reiterating comments made by other officials.
"The Fed has indicated very strongly that they are willing to be
patient, but also [that] the rising yields are an indication of
strong growth, so that is a good environment for equities to be
in," Mrs. Shah said.
After the opening bell, Lyft rose about 5% after the
ride-sharing company disclosed strong February ride figures late
Tuesday. Competitor Uber also rose 3.5%.
Investors are awaiting data on activity in the services sector
from the Institute for Supply Management, due at 10 a.m. ET. The
figures are expected to show that sectorwide activity expanded for
a ninth consecutive month in February.
The Fed's beige book report, due at 2 p.m. ET, will offer the
latest collection of business anecdotes, offering insights into how
companies are gearing up for the reopening of the economy.
In commodity markets, Brent crude, the international benchmark
for oil, rose 1.5% to $63.62 a barrel. Gold prices fell 1.3%.
Overseas, the pan-continental Stoxx Europe 600 fell 0.1%.
Most major Asian indexes gained. China's Shanghai Composite
Index rose almost 2%, while in Hong Kong, the Hang Seng jumped
2.7%. Japan's Nikkei 225 edged up 0.5%, and South Korea's Kospi
Amber Burton contributed to this article.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
March 03, 2021 10:28 ET (15:28 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.