Rising interest rates send stocks sliding; tech plunges

NEW YORK — Global stocks fell Thursday as interest rates in the U.S. 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 have sent bond prices tumbling over the past 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 U.S. and Europe.

But the big drop in bond prices is sending 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 compared to 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.

“Economic data for months has been strengthening,” he said. “The bond market has completely ignored it until recently.”

The S&P 500 index skidded 23.90 points, or 0.8 percent, to 2,901.61. The Dow Jones Industrial Average lost 200.91 points, or 0.7 percent, to 26,627.48. The

Nasdaq composite fell 145.57 points, or 1.8 percent, to 7,879.51. The Russell 2000 index of smallercompany stocks gave up 24.38 points, or 1.5 percent, to 1,646.91.

Bond prices fell again. The yield on the 10-year Treasury note climbed to 3.18 percent from 3.16 percent. Yields began climbing Wednesday following encouraging signs on hiring by private companies and growth for services companies.

That data suggests the economy should keep growing at a solid pace. That translates to bigger profits for U.S. companies and continued increases in interest rates by the Federal Reserve, which raises rates to keep inflation in check. But after an early rally on Wednesday, investors have been considering the negative aspects of that increase in yields.

The health of the economy and the pace of inflation will both be in focus Friday morning after the Labor Department makes its monthly jobs report. That will include hiring by governments and private companies in September and also will include data on wage increases. Stocks plunged in February after the department said wages increased sharply the month before.

Alphabet, Google’s parent company, fell 2.8 percent to $1,177.07. That was its worst loss in five months. Apple slid 1.8 percent to $227.99 and Microsoft lost 2.1 percent to $112.79. Facebook shed 2.2 percent to $158.85 and Amazon declined 2.2 percent to $1,909.42.

Still, Mr. Samana said investors aren’t shying away from the stock market because many investors are still buying shares of companies that have been left out of the market’s recent gains. Bank stocks have made tiny gains this year, but they climbed Thursday because higher interest rates mean they make bigger profits on mortgages and other types of loans. Bank of America added 1.2 percent to $30.37 and Wells Fargo rose 1.5 percent to $53.46.

Barnes & Noble climbed 21.8 percent to $6.65 after the bookseller said it will review offers from potential buyers, including one from founder and chairman Leonard Riggio, the company’s biggest shareholder. Even after Thursday’s gain, Barnes & Noble stock is slightly lower in 2018 and has lost almost two-thirds of its value since July 2015.

Benchmark U.S. crude slid 2.7 percent to $74.33 per barrel in New York. U.S. crude hit four-year highs this week. Brent crude, used to price international oils, lost 2 percent to $84.58 per barrel in London.