Stock Market Today: Tech Stocks Fall As Investors Consider Rate Hikes, Covid

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Jerome Powell has been re-appointed to head the Federal Reserve.

Alex Wong / Getty Images

Tech stocks were down on Tuesday, as bond yields rose.

In the afternoon discussions, the


Dow Jones Industrial Average

was up 35 points, or 0.1%, after the index edged up 17 points on Monday to close at 35,619.


S&P 500

was down 0.4%, while the


Nasdaq Composite

slipped 1.4%.

“The Nasdaq is being punished as investors reduce their large-cap technology bets as… Treasury yields continue to rise,” wrote Edward Moya, senior market analyst at Oanda.

The 10-year Treasury yield hit 1.67% after a close of 1.62% on Monday. This is the highest level since approaching its 2021 high of 1.75% just over a month ago. The upside is a concern for investors, many of whom see the return exceeding this level fairly quickly, as it is still below the inflation rate that investors expect over the long term, a historic rarity.

Higher bond yields often hurt tech stocks the most. Higher returns make future profits less valuable in current terms, and many tech companies are investing heavily today to generate large profits many years later.

Since the 10-year rate started rising 1.55% on Friday, the Nasdaq has been down almost 3%.

The decline in technology also weighed on the S&P 500. Technology names play a major role in the index, so large moves in this sector tend to take the index one way or the other. other.

The re-appointment of Jerome Powell as chairman of the Federal Reserve has prompted investors to anticipate their expectations of when the central bank will raise rates for the first time. Under Powell, who promised at a press conference with President Joe Biden to focus on fighting inflation, markets see a first rate hike around June 2022.

Powell was considered the favorite to lead the central bank for the next four years. Runner-up Lael Brainard, a Fed governor who was appointed vice chairman, was seen as someone who would lead the Fed in a more accommodating direction.

Elsewhere, the price of WTI crude oil gained 2.7% to $ 78.80 a barrel. This came after the announcement that the United States and other countries would release oil reserves to add supply to an oil market that has pushed up the price of the raw material this year. The move was eagerly awaited and technicians had noted that the price of oil would likely attract buyers to Monday’s closing level.

The


Energy Sector Select SPDR

The exchange-traded fund (XLE) rose 3%.

Hurting stocks abroad, German Chancellor Angela Merkel said the current surge in coronavirus infections is worse than anything the country has experienced so far in the pandemic.

The pan-European


Stoxx 600

fell 1.3% and that of Hong Kong


Hang Seng Index

fell 1.2%.

Here are five actions in motion Tuesday:


western digital

(ticker: WDC) the stock rose 6% after being upgraded to Buy from Neutral at Mizuho. Peer


Micronic Technology

(MU) saw its stock gain 1.2% after getting the same upgrade from Mizuho.


Best buy
Co.

The stock (BBY) fell 14% after the company reported earnings of $ 2.08 per share, beating estimates of $ 1.91 per share, on revenue of $ 11.9 billion. dollars, higher than expectations of $ 11.6 billion.


XPeng

(XPEV) jumped 5.2% after the Chinese electric vehicle maker reported better-than-expected third-quarter results.


Burlington Stores

The stock (BURL) gained 9.1% after the company reported earnings of $ 1.36 per share, beating estimates of $ 1.25 per share, on sales of $ 2.2 billion, in accordance with expectations.

Write to Jacob Sonenshine at [email protected]

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