Tech stocks were falling on Tuesday, as bond yields jumped.
In morning trading, the
Dow Jones Industrial Average
was little changed, after the index edged up 17 points Monday to close at 35,619. The
was down 0.1%, while the technology-heavy
was down 0.5%.
“Bond yields continue to weigh on big cap tech names,” wrote Tom Essaye, founder of Sevens Report Research.
The 10-year Treasury yield rose to 1.65% from a 1.62% close on Monday. It’s the highest level since it neared its 2021 high of 1.75% just over a month ago. The move higher is a slight concern for investors, many of whom see the yield going above that level fairly soon, as it’s still below the rate of inflation investors expect for the long term, a rarity historically.
Higher bond yields often hurt tech stocks the most. Higher yields make future profits less valuable in current terms, and many tech companies are investing heavily today to produce large profits many years down the line.
The move lower in tech was also weighing on the S&P 500. Tech names play a major role in the index, so big moves in that sector tend to bring the index in one direction or the other.
Elsewhere, the price of WTI crude oil gained 1.3% to $77.72 a barrel. That came after news that the U.S. and other countries will release oil reserves to add supply to an oil market that has sent the price of the commodity soaring this year. That move was much anticipated and technicians had noted that the price of oil would likely attract buyers at Monday’s closing level.
Energy Select Sector SPDR
Exchange-Traded Fund (XLE) was up more than 2%.
The renomination of Jerome Powell as Federal Reserve chair has prompted investors to bring forward their expectations of when the central bank will first increase rates. Under Powell, who promised in a press conference with President Joe Biden to focus on fighting inflation, markets see an initial rate increase around June 2022.
Powell was viewed as the favorite to lead the central bank for the next four years. Runner-up Lael Brainard—a Fed governor who has been nominated as vice chair—was viewed as someone who would lead the Fed in a more dovish direction.
Hurting stocks overseas, German Chancellor Angela Merkel said the current surge in coronavirus infections is worse than anything the country has seen so far in the pandemic.
was 0.7% lower and Hong Kong’s
Hang Seng Index
Here are four stocks on the move Tuesday:
(ticker: WDC) stock rose 7.2% after getting upgraded to Buy from Neutral at Mizuho. Peer
(MU) saw its stock gain 2.8% after getting the same upgrade from Mizuho.
Write to Jacob Sonenshine at firstname.lastname@example.org