Stocks fall, pulled down by IT and energy; bond yields rise
A currency trader watches computer monitors near screens showing the foreign exchange rates at the foreign exchange dealing room in Seoul, South Korea, Thursday, June 11, 2020. Asian shares were mostly lower Thursday, with Tokyo dropping more than 1% as the Japanese yen gained after the Federal Reserve said it would keep interest rates low through 2022.[AP Photo/Lee Jin-man]
Stocks were mostly lower early Thursday, as another tick up in bond yields once again pulled down shares of technology companies as well as the energy sector.
The S&P 500 index was down 0.8% as of 9:50 a.m. Eastern. The Dow Jones Industrial Average fell 0.1% and the technology-heavy Nasdaq Composite lost 1.6%.
The market touched new highs a day earlier after the Fed said U.S. economic growth should rebound to 6.5% this year — the strongest since the 1980s — and inflation will climb above 2% for the first time in years.
Bond yields ticked higher again, with the yield on the 10-year Treasury note rising to 1.75%, remaining at levels not seen since January 2020.
Big technology stocks continued to be volatile and move mostly downward, as the tick up in bond yields has made expensive technology stocks less attractive. Apple shares fell 2%, Tesla was down 2.5%, and Microsoft fell 1.5%.
Investors have worried that if inflation picks up, central banks might respond by raising interest rates, which would cool economic growth. But Fed Chairman Jerome Powell’s comments at a news conference appeared to reassure them. Fed officials have said they would let the U.S. economy "run hot" to make sure a recovery is gaining traction.
Bank stocks, which tend to do well as interest rates rise and economies improve, were moving higher. Wells Fargo was up 3%, Bank of America was up 2.5% and JPMorgan Chase was up 2%.
Investors are betting the economic malaise will dissipate as spring arrives and more Americans get vaccinated against the coronavirus. The $1,400 stimulus checks the Biden administration began sending to individuals last weekend are helping. Fed policymakers foresee unemployment falling from 6.2% to 4.5% by year’s end and to 3.9% at the end of 2022.
Energy prices fell as well, with U.S. crude oil falling 2.5% to $62.99 a barrel in New York. That dragged energy companies lower as well. The energy sector of the S&P 500 was down 1.1%.