Stocks decline as interest rates rise

U.S. and global stocks slid Thursday as interest rates in the United States continued to rise. Technology and internet companies skidded, and the Nasdaq composite took its biggest loss in three months.

Strong reports on job gains and the service industry sent bond prices tumbling over the last two days as traders bet the U.S. economy will keep growing at about its current clip. Government bonds are stable investments that look most appealing when economic growth is shaky, so investors sold those bonds in the United States and Europe.

But the big drop in bond prices sent interest rates sharply higher, a development that worries investors because it can eventually slow economic growth by making borrowing more expensive for consumers and businesses. It also makes bonds a more intriguing investment than stocks.

Sameer Samana, strategist for the Wells Fargo Investment Institute, said that after months of positive economic data, traders in the bond market are selling because they’ve decided yields are too low for them to get a good return on their investments.

The Standard & Poor’s 500 index slid 23.90 points, or 0.8%, to 2,901.61. The Dow Jones industrial average slid 200.91 points, or 0.7%, to 26,627.48. The Nasdaq composite dropped 145.57 points, or 1.8%, to 7,879.51. The Russell 2000 index sank 24.38 points, or 1.5%, to 1,646.91.

Bond prices fell again. The yield on the 10-year Treasury note climbed to 3.18% from 3.16%.

Alphabet, Google’s parent, sank 2.8% to $1,177.07, its biggest loss in five months. Apple fell 1.8% to $227.99. Microsoft slid 2.1% to $112.79. Facebook skidded 2.2% to $158.85, and Amazon declined 2.2% to $1,909.42.

Still, Samana said investors aren’t shying away from the stock market because many are still buying shares of companies that have been left out of the market’s recent gains. Bank stocks, which have made tiny gains this year, climbed Thursday because higher interest rates mean banks can make bigger profits on loans.

Industrial and energy companies have lagged behind the broader S&P 500 in 2018. Those stocks fell Thursday, but they did better than the rest of the market.

The same pattern played out in Europe as stocks and bond prices fell.

Deals hopes boosted shares of some companies. Barnes & Noble soared 21.8% to $6.65 after the bookseller said it will review offers from potential buyers, including one from founder and chairman Leonard Riggio.

Benchmark U.S. crude slid 2.7% to $74.33 a barrel after hitting four-year highs this week. Brent crude, used to price international oils, fell 2% to $84.58 a barrel.