Wall Street muted as high yields weigh on tech; Boeing soars
Wall Street indexes were pulled off session highs on Monday as technology stocks came under pressure from rising Treasury yields, although losses in the Dow Jones were mitigated by Boeing, which surged on a potential Saudi Arabian order.
The Nasdaq fell the most among its peers, coming off early gains as heavyweight technology stocks retreated. Higher Treasury yields tend to weigh on tech, as they discount future earnings from the sector.
Bank stocks benefited from rising yields, with the financials sector adding 0.1%. Yields rose as investors positioned for potential effects of the Federal Reserve’s tapering. [US/]
“Watch for interest rates to apply some pressure to the tech stocks. So if we do get higher rates - tech will slow down a little bit and a rotation to financials makes sense in that scenario. Higher rates, banks make more money,” said Jay Pestrichelli, chief executive of investment firm ZEGA Financial.
Boeing was the top boost to the Dow Jones, rising 5.0% to a three-month high after Emirates announced an order for two 777 Freighters and as Saudi Arabian Airlines was in talks with the planemaker for a wide-body jet order.
Electric carmaker Tesla Inc fell 4.2% after chief Elon Musk got into a spat with Bernie Sanders as the U.S. senator demanded the wealthy pay their “fair share” of taxes.
Tesla’s declines follow a steep 15.4% drop last week after Musk offloaded a combined $6.9 billion worth of shares in the electric-car maker.
Focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot Inc and Macy’s Inc. Their results will round off an upbeat third-quarter earnings season, which pushed Wall Street to new highs.
Walmart, which is set to report earnings on Tuesday, fell 0.4% , while the S&P retailers index added 0.4%.
Retail sales data for October is also due on Tuesday, and is expected to show the impact of inflation on consumer spending.
“Inflation is probably going to end up helping (retailers) somewhat because some of these big-box companies are able to ... raise prices and maintain pretty close to their margin levels,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
At 12:03 p.m. ET, the Dow Jones Industrial Average was up 6.05 points, or 0.02%, at 36,106.36 and the S&P 500 was down 2.93 points, or 0.06%, at 4,679.92. The Nasdaq Composite was down 42.10 points, or 0.27%, at 15,818.86.
The S&P materials sector lagged its peers with a 0.7% fall, as signs of weakness in China’s property sector dented major metal miners. The sector is a key driver of global metal demand.
Dollar Tree Inc jumped 13.7% and was the top gainer on the S&P 500 after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer.
Declining issues outnumbered advancers for a 1.29-to-1 ratio on the NYSE and for a 1.50-to-1 ratio on the Nasdaq.
The S&P index recorded 41 new 52-week highs and two new lows, while the Nasdaq recorded 114 new highs and 92 new lows.