Thursday, March 18, 2021
Tech stocks fall as the bond rout continues
U.S. stocks fell on Thursday led by technology shares as a spike in bond yields fueled fears of equity valuations and caused investors to sell growth-focused high flyers.
The S&P 500 slid 0.4%, falling from a record closing high reached in the previous session. The tech-heavy Nasdaq Composite dropped 1.4% as Apple, Alphabet, Microsoft and Facebook all fell at least 1%. Tesla slipped more than 3%. The Dow Jones Industrial Average traded 150 points higher, supported by bank shares.
The move came as the 10-year Treasury yield jumped 11 basis points to 1.75%, its highest level since January 2020. The 30-year rate also climbed 6 basis points and breached the 2.5% level for the first time since August 2019. Rising bond yields can have an outsized impact on growth stocks as they make their future returns less valuable today.
“Risk of rates rising too fast remains a key concern,” said Craig Johnson, technical market strategist at Piper Sandler. “Buying pressure has not been equal over the last several weeks as growth stocks lag behind due to headwinds from higher interest rates.”
Investors digested a mixed bag of economic data Thursday. Weekly initial jobless claims totaled 770,000 for the week ended March 13, worse than an estimate of 700,000, according to economist polled by Dow Jones.
Read the rest here.