Stock Market News

S&P 500 Slumps as Rising Yields Trigger Sea of Red

By Yasin Ebrahim – The S&P 500 fell Tuesday, as tech stocks slumped following a surge in Treasury yields and signs of consumer weakness at a time when concerns about a more sustained pace of inflation continue to heat up.

The S&P 500 fell 1.8%, the Dow Jones Industrial Average slipped 1.6%, or 507 points, the Nasdaq slumped 2.6%.

The U.S. 10-year Treasury yield topped 1.5%, rising to its highest level since June, as investors fret about the prospect of the Federal Reserve raising interest rates sooner than expected to control inflation.

“The many supply and demand imbalances, including new production constraints stemming from the pandemic and supply problems, could make inflation surge more than anticipated,” Desjardins said in a note.

Tech was shunned as growth sectors of the market — with earnings that are further out into future — become less attractive in a rising rate and inflationary environment, where money today is more valuable than money in the future.

Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL), (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) were more than 2% lower.

Chip stocks pushed the broader tech sector further into the red, ASML (NASDAQ:ASML), Applied Materials (NASDAQ:AMAT) and Teradyne (NASDAQ:TER) the biggest decliners.

Energy was the sole sector in the green, despite oil prices paring gains as investors continue to expect rising energy will persist amid supply-chain bottlenecks and improved energy demand.

On the economic front, consumer confidence fell well short of investor expectations as the impact of the delta variant weighed on sentiment.

The Conference Board’s consumer confidence index fell unexpectedly to a reading of 109.3 from 115.2, missing economists estimates for 115.0.

“Just like what we have seen in the University of Michigan sentiment data of the past two months, it looks like consumers are feeling the pain of disappointment caused by the Delta variant of COVID,” Jefferies (NYSE:JEF) said in a note.

In other news, Ford Motor (NYSE:F) unveiled plans to invest in a new assembly plant and three battery factories, in an effort to speed up its push into electric vehicles


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