Nasdaq Enters Correction Territory as Tech Shares Sink
08 Março 2021 - 7:24PM
Dow Jones News
By Anna Hirtenstein and Amber Burton
Technology stocks continued falling Monday, pulling the Nasdaq
Composite into correction territory, as a selloff in U.S.
government bonds extended into a sixth week and sapped demand for
the once highflying shares.
The Nasdaq dropped 310.99 points, or 2.4%, to 12609.16,
extending the declines from its Feb. 12 record to more than 10%.
Rising bond yields dent the allure of growth stocks like those of
big tech companies.
Apple shares dropped $5.06, or 4.2%, to $116.36, extending their
declines for the year to 12%. Netflix and Facebook posted declines
of more than 3%, while Tesla, another investor favorite, shed
$34.95, or 5.8%, to $563. Shares of the electric-vehicle maker have
dropped more than 20% in 2021.
Meanwhile, a rotation in the stock market continued: The Dow
Jones Industrial Average surged 306.14 points, or 1%, to 31802.44
following progress on a new fiscal stimulus bill that brightened
economic prospects. The blue-chip index -- which is weighted more
heavily toward cyclical sectors -- surged as much as 652 points
earlier in the session, setting a new intraday record before
pulling back.
The S&P 500 fell 20.59 points, or 0.5%, to 3821.35, pulled
lower by losses in the tech, communication services and healthcare
groups.
In the bond market, the yield on benchmark 10-year U.S.
Treasurys ticked up for the fourth consecutive session to 1.594%,
its highest since February 2020, from 1.551% Friday. In addition,
many investors are continuing to keep an eye on the pace in which
rates go up.
"Even though we got somewhat of a respite from the rising-rate
reaction, we do think that's really important to keep an eye on,"
said Lisa Erickson, the head of traditional investments at U.S.
Bank Wealth Management. "Certainly the trajectory for rates is up
as the economy reopens, so a lot of it just depends on the speed
and the pace of how quickly rates go up."
President Biden's $1.9 trillion Covid-19 relief plan was
approved in the Senate over the weekend and faces a vote in the
House as early as Tuesday. The additional fiscal spending is
expected to bolster the pace of economic recovery and boost
inflation. As the outlook brightens, money managers are moving out
of government bonds and technology stocks and into sectors such as
banks and energy that are likely to rebound with the economy.
"Stimulus checks into people's bank accounts will be a big
propeller of growth, given the consumer in the U.S. makes up such a
big part of U.S. growth," said Shaniel Ramjee, a multiasset fund
manager at Pictet Asset Management. "The underlying strength of the
U.S. economy, growing expectations that the stimulus gets fully
passed, plus inflation expectations rising because of oil: These
are all likely to continue to push bond yields higher."
Tech stocks have been retreating in recent weeks as vaccination
programs advance and economic data point to the recovery being
under way. The Nasdaq Composite Index declined more than 2% last
week, losing ground for a third consecutive week. That is because
investors are betting that the largest media, communications and
online-shopping companies will log a slower pace of growth as
pandemic lockdowns end.
"The main market element is what's happening in the yield
market: The U.S. tech side is suffering from the current
normalization in the cost of capital," said Samy Chaar, chief
economist at Lombard Odier. "The market is currently acknowledging
that we're in a recovery. Flows are rebalancing to better reflect
this cyclical recovery."
Among other stocks, General Electric rose 57 cents, or 4.2%, to
$14.17. The Wall Street Journal reported that the industrial
conglomerate was nearing a $30 billion deal to combine its
aircraft-leasing business with Ireland's AerCap.
Investment firm Athene Holding gained $2.92, or 6%, to $51.80,
after it said it would combine in an all-stock deal with Apollo
Global Management.
Overseas, the pan-continental Stoxx Europe 600 rose 2.1%, led by
banking stocks.
In Asia, most major benchmarks fell. The Shanghai Composite
dropped 2.3% and Hong Kong's Hang Seng Index declined 1.9% as
investors grappled with signs that Chinese policy makers will take
more action to rein in debt and prevent asset bubbles from
forming.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Amber
Burton at Amber.Burton@wsj.com
(END) Dow Jones Newswires
March 08, 2021 17:09 ET (22:09 GMT)
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