U.S. stocks slipping from record heights
NEW YORK (AP) — U.S. stocks are slipping in afternoon trading on Monday, as losses for big banks pull the S&P 500 and Dow Jones Industrial Average off the record highs they set at the end of last week.
The S&P 500 was 0.6% lower. The Dow Jones Industrial Average was down 107 points, or 0.3%, at 32,965, and the Nasdaq composite was 1.1% lower.
Financial stocks dropped to some of the market's sharpest losses amid worries about how much pain big banks will take following soured trades made by a major U.S. hedge fund. Stocks of energy producers were also weak after the price of crude oil edged lower. Technology stocks also fell broadly as China announced more tax breaks to bolster its own chip sector. Gains for Facebook and other market heavyweights helped to limit the S&P 500's losses.
Most stocks across Wall Street were falling, while Treasury yields rose slightly. A widely followed measure of nervousness in the stock market climbed 12%, but the VIX index, which shows how much volatility traders are bracing for from the S&P 500, remains close to its lowest level since the pandemic rocked markets a year ago.
"It's high, which indicates people are nervous, but it's not panicky," said Tom Martin, senior portfolio manager with Globalt Investments.
The movements mark the
(Continued from Page 1) latest ebb for Wall Street, which has been mostly climbing in a series of stops and starts. Supporting the market have been rising expectations that a supercharged economic recovery is on the way thanks to Covid-19 vaccinations, immense spending by the U.S. government and continued low rates from the Federal Reserve. Weighing on stocks at the same time, though, are worries about a coming rise in inflation and possibly tooebullient prices across the market.
Several key reports on the economy are scheduled for this week, which could help show whether stocks deserve the lofty prices they've reached. Among the headliners is Friday's jobs report, where economists expect to see a big acceleration in hiring.
On Wednesday, President Joe Biden will also give details about his proposal to rebuild roads, bridges and other infrastructure. Shares of raw-material producers have rallied recently on rising expectations for infrastructure spending by Washington, even though many past presidential administrations have failed to make it happen.
On Monday, though, the market's spotlight was squarely on financial companies after Japanese bank Nomura Holdings and Swiss bank Credit Suisse said they're facing potentially significant losses because of their dealings with a major client, though the exact magnitude is still unclear.
Nomura estimated the claim against its client could be about $2 billion.
Credit Suisse said that it "and a number of other banks" are exiting trades they made with a significant U.S.-based hedge fund, which defaulted on a "margin call" last week. A margin call happens when a broker tells a client to put up cash after it borrowed money to make trades. Neither Credit Suisse nor Nomura named the client, but news reports identified it as New York-based Archegos Capital Management.
Shares of Credit Suisse and Nomura each fell at least 16% in their home countries, and U.S. banks got caught in the downdraft as investors question whether the soured trades will stay isolated or have a more widespread effect through the system.
"This is sort of an example of the leverage you don't see," Martin said. "We all know there's a fair amount of debt out there, but what we don't know is how much of this is out there."
Morgan Stanley fell 3.5%, and financial stocks across the S&P 500 lost 1.2% for one of the sharpest losses among the 11 sectors that make up the index.
Energy stocks in the S&P 500 fell 1.3% as the price of U.S. crude oil fell slightly to $60.96 per barrel. Brent crude, the international standard, lost 0.1% to $64.35 per barrel.