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S&P 500 Makes Sluggish Start to Week as Rallying Yields Weigh on Tech

Stock MarketsSep 27, 2021 04:35PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 ended lower Monday, as tech stocks slipped on a jump in Treasury yields, offsetting a jump in energy and financials.

The S&P 500 fell 0.3%, the Dow Jones Industrial Average gained0 0.2%, or 71 points, the Nasdaq was down 0.5%.

Energy added to gains from last week as oil prices soared on expectations for tighter crude supplies as energy demand continues to recover.

Goldman Sachs (NYSE:GS) raised its 2022-to-2023 Brent price forecast to range of $81 to $85 per barrel from $75 to $65 per bbl, amid expectations for "reduced OPEC spare capacity as global demand recovers, structural cost inflation across the oil curve and a higher oil price required for US producers to grow given the increase in the cost of capital."

Occidental Petroleum (NYSE:OXY), Cabot Oil & Gas (NYSE:COG), and Diamondback Energy (NASDAQ:FANG) were up more than 7%.

Financials were boosted by an ongoing bid in bank stocks, underpinned by a climb in Treasury yields as the 10-year Treasury rose above 1.5%, before retreating.

The rise in yields comes as investors bet the Federal Reserve may have to raise rates sooner than many expect as supply-chain issues will continue to boost the pace of inflation.

"New COVID-19 outbreaks have shut factories in Vietnam and China, adding to higher year-over-year raw materials and shipping costs, and ongoing U.S. port delays unloading shipping containers," Da Davidson said in a note. "In the U.S. labor shortages are pressuring both the shipping and trucking segments, causing additional delays."

Lincoln National (NYSE:LNC), People’s United Financial (NASDAQ:PBCT), and M&T Bank (NYSE:MTB) were up about 5% on the day.

In tech, Apple (NASDAQ:AAPL), ended 1% lower amid fears supply chain issues could delay the tech giant's shipments of iPhones.

Sentiment on tech was also sourced by rising rates and inflation.

Investors in growth sectors like tech, which tend to have higher valuations, usually have to wait longer to recoup their investments, which is unattractive in an inflationary environment, where money today, is worth more than money in the future.

Microsoft (NASDAQ:MSFT),  Google-parent Alphabet NASDAQ:GOOGL), and Amazon (NASDAQ:AMZN) were in the red, while Facebook (NASDAQ:FB) traded above the flatline.

On the economic front, monthly durable goods orders rose by 1.8% in August, the largest monthly increase since May.

"Headline orders were boosted by a rebound in the civilian aircraft component, as signaled by data from Boeing (NYSE:BA); the consensus forecast always looked too low," Pantheon Macroeconomics said in a note.

S&P 500 Makes Sluggish Start to Week as Rallying Yields Weigh on Tech
 

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Comments (7)
Emmanuel Jabin
Emmanuel Jabin Sep 28, 2021 1:37AM ET
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most of the currency pairs like AUD/JPY that have been moving upwards in the same direction with the stock markets (since last year 2020) have broken down and fallen below their 100 Daily Moving Average and 200 Daily Moving Average. the Stock Indices like the US30 have stopped going up and now they are just ranging. I think this is the calm before the storm. FX risk currency assets are falling and Stock market will soon follow!! it is only a matter of time.
Agana Moses
Agana Moses Sep 27, 2021 9:35PM ET
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dav lo
dav lo Sep 27, 2021 7:30PM ET
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S&P at 4444 while 2.5% low from 52 week top, what sluggish what do you want? You manipulate dropping the other index but not your own. Liar
stevie Shae
stevie Shae Sep 27, 2021 7:30PM ET
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okay I will do that
Ayumastura PinkLady
Ayumastura PinkLady Sep 27, 2021 5:46PM ET
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I always get the whole market picture by looking at the picture.
stevie Shae
stevie Shae Sep 27, 2021 5:46PM ET
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okay
Millennial Metals
Millennial Metals Sep 27, 2021 5:40PM ET
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50% crash coming
New Jazenevd
New Jazenevd Sep 27, 2021 5:20PM ET
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Tech stocks did not slip, unless “tech stocks” means exclusively 4-5 household mega cap names. Some money moved today from mega-caps to small-caps, including small-cap tech. This is a healthy sign for the market, wider participation in uptrend.
michael engel
michael engel Sep 27, 2021 5:03PM ET
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SPX will rise to close Sept 16/17 gap. Inflation is rising, but the 3M is going NR. The republican  & democrat hate each so much so much : here will be no deal.
 
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