Wall Street closes lower, pulled down by IT and energy
Stocks were mostly lower in afternoon trading Thursday, as higher bond yields once again pulled down shares of technology companies and the energy sector sold off on a drop in oil prices
BEIJING — Stocks were mostly lower in afternoon trading Thursday, as higher bond yields once again pulled down shares of technology companies and the energy sector sold off on a drop in oil prices.
The S&P 500 index was down 1% as of 3:00 p.m. Eastern. The technology-heavy Nasdaq Composite lost 2.4%. The Dow Jones Industrial Average was down 10 points to 33,004, after rising more than 200 points earlier.
Bond yields ticked higher again, with the yield on the 10-year Treasury note rising to 1.72%, near levels not seen since January 2020.
Big technology stocks continued to be volatile and move mostly downward, as the tick up in bond yields has made expensive technology stocks less attractive. Apple shares fell 2.7%, Tesla was down 5%, and Microsoft fell 2.3%.
Bank stocks were among the best performers as investors bet that higher interest rates would translate into higher profits. Industrial stocks also made solid gains. Wells Fargo was up 3.5%, Bank of America was also up 3.5% and JPMorgan Chase was up 2.6%.
The market touched new highs a day earlier after the Fed said U.S. economic growth should rebound to 6.5% this year — the strongest since the 1980s — and inflation will climb above 2% for the first time in years.
“Early in a cycle you’re going to see higher inflation and higher interest rates and demand as global activity picks up,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Investors have worried that if inflation picks up, central banks might respond by raising interest rates, which would cool economic growth. But Fed Chairman Jerome Powell’s comments at a news conference appeared to reassure them. Fed officials have said they would let the U.S. economy “run hot” to make sure a recovery is gaining traction.
The U.S. economy still has a lot of recovering to do. The Labor Department said Thursday that the number of Americans who filed for unemployment benefits last week rose to 770,000, remaining well above historic norms for that metric.
Investors are betting the economic malaise will dissipate as spring arrives and more Americans get vaccinated against the coronavirus. The $1,400 stimulus checks the Biden administration began sending to individuals last weekend are helping. Fed policymakers foresee unemployment falling from 6.2% to 4.5% by year’s end and to 3.9% at the end of 2022.
Energy prices fell, with U.S. crude oil losing 7.4% to $59.82 a barrel in New York. That dragged energy companies lower as well. The energy sector of the S&P 500 was down 3.2%.
