By Damien J Trois and Alex Veiga
Technology companies led a broad slide for stocks on Wall Street on Monday, as rising bond yields and energy prices heightened investor concerns about higher inflation.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped 0.9% and the tech-heavy Nasdaq fell 2.1%.
Oil prices hit a seven-year high as OPEC and allied oil producers stick to a cautious production plan despite rising global demand for crude.
Treasury yields, which rose sharply last week, rose again. The recent surge has contributed to weakness in technology stocks. Apple fell 2.5% and Microsoft fell 2.1%.
Big communication companies also fell. Facebook slipped 4.9% a day after a former employee told “60 Minutes” that the company has consistently chosen its interests over the public good. The social network and its Instagram and WhatsApp platforms also faced a worldwide shutdown, which began around noon on Monday.
Megan Hornman said, “What you see today are those areas – the expensive, growth technology kind of areas – that went up in the past few months because interest rates were low, now you’re reversing because you’re going to lower interest rates. Seeing growth.” Director of Portfolio Strategy at Verdance Capital Advisors.
The S&P 500 fell 56.58 points to end at 4,300.46. The decline follows the benchmark index’s worst week since winter and a 4.8% drop for September, the S&P 500’s first monthly loss since January.
The Dow Jones Industrial Average fell 323.54 points to end at 34,002.92. Nasdaq closed down 311.21 points at 14,255.48.
Shares of smaller companies also declined, the Russell 2000 Index closed at 2,217.47, down 24.16 points, or 1.1%.
US crude oil prices rose 2.3% and remained above $77 a barrel for the first time since 2014. OPEC and allied oil-producing countries on Monday decided to stick with their cautious approach to restoring oil production during the pandemic, agreeing to add 400,000 barrels per day. in November.
Natural gas prices jumped 2.6%. Energy companies rose with energy prices. Devon Energy rose 5.3% for the biggest gainer in the S&P 500. Marathon Oil climbed 4.1%.
The yield on the 10-year Treasury rose to 1.49% from 1.47% on Friday. The yield on September 20 was 1.31%. The rapid rise in interest rates has forced a re-evaluation of whether stocks have become too expensive, especially for already high-priced technology companies.
Investors are concerned about inflation as oil prices rise and companies are facing supply problems that increase their costs and force them to raise prices. Wall Street is also concerned about the Federal Reserve’s final move to reduce timely bond purchases and raise its benchmark interest rate.
“You really have a lot of reasons to trade defensively for tape right now,” said Julian Emanuel, chief equity and derivatives strategist at BTIG. “If you’re not going to see the bond market go up and yields aren’t going down, chances are you’re going to see more volatility in stocks,” he said.
Investors are also preparing for the latest round of corporate earnings, which will increase over the next several weeks. They are still closely monitoring economic data for further indications about the pace of recovery as businesses and consumers deal with the impact of COVID-19 and the highly contagious delta variant.
Wall Street will get more information on the health of the economy this week. On Tuesday, the Institute for Supply Management will release its service sector index for September. The service sector is the largest segment of the economy and its health is an important factor for development.
The Labor Department will release its employment report for September on Friday. The job market is struggling to fully recover from the damage caused by COVID-19 more than a year ago.
Tesla posted modest gains after the electric vehicle maker reported surprisingly good third-quarter deliveries. The stock gained 0.8% after gaining 4% in the opening round.
In Asia, Hong Kong’s benchmark fell more than 2% after shares of troubled property developer China Evergrande were suspended from trading. Shares were up in most European markets.