Wall Street tanks as tech stocks drag down market
Wall Street has tanked today, with technology stocks in particularly dragging down the markets.
The S&P 500 was down more than 2 per cent at one point, and retreating technology stocks dragged the Nasdaq down more than 3 per cent, as the benchmark 10-year note yields surged above 1.6 per cent to the highest in a year, pushing safe-haven bonds into their biggest fall since May.
The Treasury note yield also rose above the 1.48 per cent S&P 500 dividend yield, wiping out the strong advantage that the stock market has held over bonds during the pandemic.
London’s FTSE 100 closed down 0.11 per cent, while the FTSE 250 ended the day 0.54 per cent down.
Investors are looking forward to the budget plan next Wednesday with expectations of more stimulus measures and emergency support for businesses.
Wall Street’s main indexes opened lower on today, as heavyweight technology-related stocks remained under pressure with a rise in US treasury yields, while data showed weekly jobless claims fell more than expected.
The Dow Jones Industrial Average fell 5.92 points, or 0.02 per cent, at the open to 31,955.94.
The S&P 500 opened lower by 9.63 points, or 0.25 per cent, at 3,915.80, while the Nasdaq Composite dropped 85.33 points, or 0.63 per cent, to 13,512.64 at the opening bell.
Market movers
The morning’s biggest winner was packaging giant DS Smith who rose by almost 9 per cent as its rival Mondi weighs up a £5bn takeover.
Anglo American gained more than 4 per cent as it boosted dividends after strong commodity prices helped the miner recover from Covid disruptions.
Royal Dutch Shell and HSBC also rose 3.7 per cent and 2.6 per cent respectively.
Hikma Pharmaceuticals was the morning’s biggest faller, dropping by almost 5.4 per cent, followed by Standard Chartered’s 4.8 per cent hit.
Meanwhile, outsourcer Serco rose 5 per cent as it reinstated dividends and raised 2021 forecasts after posting a 20 per cent jump in annual revenue.
“The moves are what you would expect if our assessment of the outlook for economic growth has led to an increase in inflation expectations,” said Simona Gambarini, a markets economist at Capital Economics.
“In this type of scenario, you would see rotation towards sectors like materials and energy, which benefit the most from further recovery in the economy.”
Around the world
Elsewhere, Hong Kong’s Hang Seng Index jumped 1.5 per cent, trimming more than half of its losses from the previous day where a stamp duty hike plunged shares.
European stocks have risen, with Euro Stoxx 50 Futures up around 0.6 per cent in early trading.
On Wall Street, the Dow Jones average jumped 1.35 per cent to a record high, outperforming 1 per cent gains in the tech-heavy Nasdaq.