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Wall Street tumbles on tech selloff as bond yields climb

Stock MarketsFeb 25, 2021 02:30PM ET
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2/2 © Reuters. FILE PHOTO: A Wall Street sign outside the New York Stock Exchange 2/2

By Devik Jain and Shreyashi Sanyal

(Reuters) - Wall Street's main indexes dropped on Thursday, with the Nasdaq on track for its worst day in four months, as technology-related stocks remained under pressure following a rise in U.S. bond yields.

The benchmark 10-year Treasury yields hit a one-year high of 1.53%, prompting investors to lock in profits on some high-flying growth stocks due to concerns over heightened valuations. [US/]

The Treasury note yield also rose above S&P 500 dividend yield, wiping out historically strong advantage that the stock market yield has held.

Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) Inc, Facebook Inc (NASDAQ:FB) and Netflix Inc (NASDAQ:NFLX) were down between 1.9% and 2.9%.

"The concern is that we haven't been in an environment of persistently rising inflation expectations so it creates this new dynamic for investors," said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors in Newport Beach, California.

"The market is stretched, a lot of forward growth expectations have been baked in and that's creating some of the excuse to blow up steam for some investors who were a little too bullish."

The S&P 500 technology sector and communication services, among the sectors that powered the market's rally in 2020, were down 3.9% and 2.3%.

The S&P 500 growth index is nearly unchanged in February, sharply underperforming the value index, which has gained more than 7% on optimism related to a post-pandemic reopening of the economy.

Meanwhile, data showed fewer Americans filed new claims for unemployment benefits last week amid falling COVID-19 infections, but the near-term outlook still remained unclear after winter storms wreaked havoc in the South region in the middle of this month.

Optimism about more U.S. stimulus and a quicker pace of vaccinations at the beginning of the month have positioned the the Dow Jones index for its best monthly gain since November.

However, the lack of significant new developments around the fiscal package and the winding down of the earnings season have caused uncertainty in the market.

"In the beginning of February, the stimulus news was the driving force but now that it has been priced in, there is nothing on the distant horizon for equity investors to be excited about and there is a concern that upside is limited," said Mike Zigmont, head of trading and research at Harvest Volatility Management.

At 01:53 p.m. ET, the Dow Jones Industrial Average fell 462.22 points, or 1.45%, to 31,499.64, the S&P 500 lost 81.40 points, or 2.07%, to 3,844.03 and the Nasdaq Composite lost 390.55 points, or 2.87%, to 13,207.42.

Tesla (NASDAQ:TSLA) Inc fell 5.5% after a media report that the electric-car maker told workers it would temporarily halt some production at its car assembly plant in California.

Moderna (NASDAQ:MRNA) Inc jumped 4.6% after the drugmaker said it was expecting to post $18.4 billion in sales from its COVID-19 vaccine this year.

Declining issues outnumbered advancers by a 5.5-to-1 ratio on the NYSE and by a 5.4-to-1 ratio on the Nasdaq.

The S&P 500 posted 70 new 52-week highs and no new low, while the Nasdaq recorded 252 new highs and 87 new lows.

Wall Street tumbles on tech selloff as bond yields climb
 

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Comments (12)
Viking Fire
Viking Fire Feb 26, 2021 12:48AM ET
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Translated: institutions rake in record profits when stock market it at highs, leaving everyone as bag holders
Daniel Lu
Daniel Lu Feb 25, 2021 5:27PM ET
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There are still highly overvalued stocks, preparing for busted balloon. Shall continue the bearish till the signal market movers are determined to push it up from the next rock bottom. Keep more cash, less stocks and buy a little VIX
nemo me impune lacessit
nemo me impune lacessit Feb 25, 2021 3:41PM ET
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Dang, this market is on the lead sled.
Dave Jones
Dave Jones Feb 25, 2021 1:57PM ET
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edges lower lolz! It's game over!
John Klan
John Klan Feb 25, 2021 1:22PM ET
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Dip buyers will come in after the 2 o'clock margin call sells. Again
Fernando Lazarini
Fernando Lazarini Feb 25, 2021 1:22PM ET
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Good afternoon, freshmen. Market is that, it goes up and then down, but it eventually follows profits. See the historical charts. It´s been that way before our parents were here.
Michele Nobile
Michele Nobile Feb 25, 2021 1:22PM ET
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in the long term we will all be dead! John Maynard Keyne......
Fernando Lazarini
Fernando Lazarini Feb 25, 2021 1:22PM ET
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Michele Nobile  it won´t take so long for the prices to converge towards fundamentals, buy good companies, they don´t become bad investiments overnight like many may fear today.
Joanna Yin
Joanna Yin Feb 25, 2021 1:14PM ET
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No Powell today ?
Mike Brarey
Mike Brarey Feb 25, 2021 1:14PM ET
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he's going to show up just before the market che closes to announce that the Fed is going to purchase bitcoin :)
nemo me impune lacessit
nemo me impune lacessit Feb 25, 2021 1:14PM ET
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Mike Brarey  With Tax payer money of which we'll receive no direct reward, but assume all the risk.  :)
Jenn foster
Jenn foster Feb 25, 2021 1:14PM ET
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Mike Brarey 🤣🤣🤣
New Jazenevd
New Jazenevd Feb 25, 2021 1:11PM ET
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Bond yields go up because bond prices go down. US prints more bonds that can hardly find any buyers unless price is discounted more and more. This is the full story. Of course, media will not tell full story, only part of it, more palatable.
Xin Zhang
Xin Zhang Feb 25, 2021 12:30PM ET
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bond yield may cause market crash, then FED is going to print money and buy all bonds.
Jermaine .A
Jermaine .A Feb 25, 2021 12:30PM ET
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Then that's when you get a dollar crash, which will be the "Big One"
Jermaine .A
Jermaine .A Feb 25, 2021 12:30PM ET
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2008 will look like the "good old days" lol
taylor jason
taylor jason Feb 25, 2021 12:30PM ET
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you couldn't be more wrong -- I would suggest listen to fed commentary/reading more on macro econ
Mitchel Pioneer
Mitchel Pioneer Feb 25, 2021 12:16PM ET
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Love the way every loss is met with interruptions in the selling, while "rallies" occur uninhibited. Only in the US Ponzi Scheme, laughingstock of the financial world.
Matt Kay
Matt Kay Feb 25, 2021 12:16PM ET
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Thank you sir for educating the masses.
Jonas Castejon
Jonas Castejon Feb 25, 2021 12:16PM ET
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Because removing the switch at the exchanges would surely change your distorted view of the stock market. Yes, the US economy is a big Ponzi scheme. You keep telling yourself that.
taylor jason
taylor jason Feb 25, 2021 12:16PM ET
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darn, forgot to put my tin foil hat on before reading this post
Jon Bal
Jon Bal Feb 25, 2021 12:10PM ET
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dollar down, equities down, treasuries down = USA exodus
Mitchel Pioneer
Mitchel Pioneer Feb 25, 2021 10:58AM ET
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The 11AM magic begins in the US Ponzi Scheme, laughingstock of the financial world.
 
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