US Stocks Pulled Lower by Techs Monday 05/10 16:14
A sell-off in technology companies dragged stocks lower on Wall Street
Monday, pulling the major indexes back from their recent all-time highs.
(AP) -- A sell-off in technology companies dragged stocks lower on Wall
Street Monday, pulling the major indexes back from their recent all-time highs.
The S&P 500 fell 1% after wobbling between small gains and losses the first
half of the day. The decline broke a three-day winning streak for the benchmark
index, which set a record high on Friday.
Big Tech companies, including Apple, Facebook, Amazon and Google's parent
company, accounted for most of the index's decline. Communication stocks and
companies that rely on consumer spending also helped pull the market lower,
outweighing gains in household goods makers, utilities and other sectors.
The wave of selling handed the Nasdaq its worst day in more than seven
weeks, as the index is heavily weighted with big technology stocks. The tech
sector, which led the market's stunning comeback in 2020, now lags the other 10
sectors in the S&P 500 so far this year with a gain of 3.9%.
"You've had a tremendous run and there's a lot of tech-focused stuff that's
up 70% to 100% in the last 12 months," said Andrew Mies, chief investment
officer at investment advisory firm 6 Meridien. "The fact that some people are
taking chips off the table is not surprising."
The S&P 500 index, which notched a weekly gain in eight of the last 10
weeks, fell 44.17 points to 4,188.43. The Dow Jones Industrial Average dropped
34.94 points, or 0.1%, to 34,742.82. The blue chip index, which hit an all-time
high on Friday for the third straight day, had traded higher for much of
Monday, but dipped into the red in the last half-hour of trading.
The Nasdaq lost 350.38 points, or 2.5%, to 13,401.86. The index is up just
under 4% so far this year, lagging well behind the S&P 500's 11.5% gain.
Small company stocks also had a rough day. The Russell 2000 index fell 58.93
points, or 2.6%, to 2,212.70.
Wall Street has been mostly rising in recent weeks amid expectations of an
economic recovery and strong profits this year. Massive support from the U.S.
government and the Federal Reserve, and increasingly positive economic data,
have also encouraged investors to push stock prices to all-time highs, despite
an undercurrent of worry about inflation and the potential for higher interest
rates later this year.
The government's latest U.S. jobs report Friday showed employers added just
266,000 jobs in April, far fewer than the 975,000 economists were expecting. It
was a steep drop from March's hiring pace of 770,000. The weak jobs number
suggests the economy is still in recovery mode and bolsters the case for the
Federal Reserve to keep interest rates low.
But keeping interest rates low means the potential for more inflation down
the road. Commodity prices spiked in early trading before settling down. Copper
rose 5% in the early going before reversing to a loss of 0.7%. Platinum, which
has several industrial uses, rose 0.1%. Investors will get some key inflation
data this week, especially on Wednesday when April's consumer price index is
Inflation has been a concern for investors since bond yields spiked earlier
this year, but yields have mostly stabilized since then. The yield on the
10-year Treasury rose to 1.61% from 1.57% late Friday.
Rising commodity prices are also starting to make a variety of everyday
products more expensive. Analysts expect any increases in these measures going
forward to be more mild and tied to the growing economy.
"This is more an effect of short-term confidence, not a long-term issue that
we're worried about," said Andrea Bevis, senior vice president at UBS Private
Wealth Management. "What matters most is what most prices are doing and we
don't foresee a big move further."
Though the employment market has been lagging the recovery, other measures
show that the economy is pushing forward. Consumer confidence and retail sales
have both been regaining ground as people get vaccinated and businesses reopen.
Americans set a record for pandemic-era air travel on Sunday, according to The
Transportation Security Administration.
Meanwhile, the most recent round of corporate earnings reports showed a
broad recovery touching many different sectors and industries during the the
first three months of the year. Much of that was anticipated ahead of the
reports and investors are now far off from the next big round of results.
"I'm not surprised to see the market take a little bit of a pause," Bevis