Stocks fall as tech retreats on Wall Street
Technology companies led a broad slide for stocks on Wall Street on Monday, as rising bond yields and energy prices stoked investors’ concerns about higher inflation.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped 0.9% and the tech-heavy Nasdaq lost 2.1%.
The price of oil hit a seven-year high as OPEC and allied oil producers stuck with a plan to cautiously raise production even as global demand for crude oil increases.
Treasury yields, which moved sharply higher last week, rose again. The recent jump has contributed to weakness in technology stocks. Apple fell 2.5% and Microsoft dropped 2.1%.
Big communication companies also fell. Facebook slid 4.9% a day after a former employee told “60 Minutes” that the company has consistently chosen its own interests over the public good.
“What you’re seeing today is those areas – the expensive, growth technology type of areas – that had led over the past few months as interest rates remained low are now reversing as you’re seeing interest rates move higher,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.
The S&P 500 fell 56.58 points to 4,300.46. The decline follows the benchmark index’s worst week since winter and a 4.8% pullback for September, the S&P 500’s first monthly loss since January. The Dow Jones Industrial Average dropped 323.54 points to 34,002.92. The Nasdaq lost 311.21 points to 14,255.48. Small company stocks also fell. The Russell 2000 index gave up 24.16 points, or 1.1%, to 2,217.47.
U.S. crude oil prices rose 2.3% and topped $77 per barrel for the first time since 2014. OPEC and allied oil producing countries on Monday decided to stay with their cautious approach to restoring oil production slashed during the pandemic, agreeing to add 400,000 barrels per day in November.
Natural gas prices jumped 2.6%. Energy companies rose along with energy prices. Devon Energy rose 5.3% for the biggest gain in the S&P 500. Marathon Oil climbed 4.1%.
The yield on the 10-year Treasury rose to 1.49% from 1.47% Friday. The yield was at 1.31% on Sept. 20. The swift rise in interest rates has forced a reassessment of whether stocks have grown too expensive, particularly already high-priced technology companies.
Investors are increasingly worried about inflation as oil prices rise and companies continue facing supply problems that increase their costs and force them to raise prices. Wall Street is also worried about the Federal Reserve’s timing on trimming back bond purchases and its eventual move to raise its benchmark interest rate.
Tesla held on to a slight gain after the electric vehicle maker reported surprisingly good third-quarter deliveries. The stock rose 0.8% after having been up 4% in the early going.
In Asia, Hong Kong’s benchmark fell more than 2% after troubled property developer China Evergrande’s shares were suspended from trading. Shares in most European markets edged higher.
Gold for December delivery rose $9.20 to $1,767.60 an ounce. Silver for December delivery rose 10 cents to $22.64 an ounce and December copper rose 5 cents to $4.24 a pound.
The dollar fell to 110.91 Japanese yen from 111.05 yen. The euro rose to $1.1624 from $1.1597.