Nasdaq Slips as Bond Yields Rise
By Anna Hirtenstein
U.S. stocks wobbled Monday and a selloff in U.S. government
bonds extended into its sixth week following progress toward a new
fiscal stimulus bill that brightened economic prospects and sapped
demand for technology stocks.
The S&P 500 climbed 0.3%. The benchmark rose 0.8% last week,
a volatile period during which investors rotated out of big
The Dow Jones Industrial Average rose 0.6%, and the Nasdaq
Composite fell 0.2% as tech stocks extended their losses.
In the bond market, the yield on benchmark 10-year US. Treasurys
ticked up to 1.591% as investors moved funds out of assets
considered to be the safest in the world. Yields rise when bond
prices fall. It had ended Friday at 1.551%, its highest since
President Biden's $1.9 trillion Covid-19 relief plan was
approved in the Senate over the weekend and faces a vote in the
House as early as Tuesday. The additional fiscal spending is
expected to bolster the pace of economic recovery and boost
inflation. As the outlook brightens, money managers are moving out
of government bonds and technology stocks and into sectors such as
banks and energy that are likely to rebound with the economy.
"Stimulus checks into people's bank accounts will be a big
propeller of growth, given the consumer in the U.S. makes up such a
big part of U.S. growth," said Shaniel Ramjee, a multiasset fund
manager at Pictet Asset Management. "The underlying strength of the
U.S. economy, growing expectations that the stimulus gets fully
passed, plus inflation expectations rising because of oil: these
are all likely to continue to push bond yields higher."
Tech stocks have been retreating in recent weeks as vaccination
programs advance and economic data point to the recovery being
under way. The Nasdaq Composite Index declined more than 2% last
week, losing ground for a third consecutive week. That is because
investors are betting that the largest media, communications and
online-shopping companies will see a slower pace of growth as
pandemic lockdowns end.
Giant tech stocks including Apple, Microsoft and Alphabet fell
after the opening bell. Apple, the biggest company on the S&P
500 by market value, has dropped more than 8% this year. Shares of
Tesla, the electric-vehicle maker that was also a favorite among
individual investors last year, slid 1.4% Monday morning. It has
lost more than 15% so far in 2021.
"The main market element is what's happening in the yield
market: The U.S. tech side is suffering from the current
normalization in the cost of capital," said Samy Chaar, chief
economist at Lombard Odier. "The market is currently acknowledging
that we're in a recovery. Flows are rebalancing to better reflect
this cyclical recovery."
Among other stocks, General Electric rose 3.8%. The Wall Street
Journal reported that the industrial conglomerate was nearing a $30
billion deal to combine its aircraft-leasing business with
Investment firm Athene Holding soared over 10% after it said it
would combine in an all-stock deal with Apollo Global
Overseas, the pan-continental Stoxx Europe 600 rose 1.3%, led by
banking stocks. Europe's stock market is benefiting from investors
rotating into value stocks, analysts said.
In Asia, most major benchmarks fell. The Shanghai Composite
dropped 2.3% and Hong Kong's Hang Seng Index declined 1.9% as
investors grappled with signs that Chinese policy makers will take
more action to rein in debt and prevent asset bubbles from
Amber Burton contributed to this article.
Write to Anna Hirtenstein at email@example.com
(END) Dow Jones Newswires
March 08, 2021 10:17 ET (15:17 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.