Stocks fall as technology pulls back, as oil hits seven-year high


Stocks fall as technology pulls back, as oil hits seven-year high

On Wall Street Monday, tech companies led a large stock market decline as rising bond yields and energy prices fueled investor worries about higher inflation.

The S&P 500 was down 1.3%, the Dow Jones Industrial Average was down 0.9%, and the tech-rich Nasdaq was down 2.1%.

Oil prices have hit a seven-year high as OPEC and other oil producers stuck to a plan to gradually ramp up production even as global demand for crude oil increases.

Yields on Treasuries, which had risen sharply the week before, rose again. The recent surge has contributed to the decline in tech stocks. Apple fell 2.5%, while Microsoft fell 2.1%.

Large communications companies have also suffered losses. Facebook fell 4.9% the next day after a former employee told “60 Minutes” that the company has always put its own interests ahead of the public good. The social network, along with its Instagram and WhatsApp platforms, experienced a global outage that began around noon Monday.

“What you are seeing today are these areas – the type of expensive growth tech areas – that had led over the past few months as interest rates stayed low are now reversing as you see them. interest rates increase, ”Megan Horneman said. , director of portfolio strategy at Verdence Capital Advisors.

The S&P 500 lost 56.58 points to 4,300.46. The drop comes after the benchmark’s worst week since the winter and a 4.8% drop in September, the S&P 500’s first monthly loss since January.

The Dow Jones Industrial Average lost 323.54 points to 34,002.92. The Nasdaq lost 311.21 points to 14,255.48.

Crude oil prices in the United States rose 2.3% and exceeded $ 77 a barrel for the first time since 2014. OPEC and its allies decided on Monday to maintain their cautious approach to restore oil production which had been reduced during the pandemic, agreeing to add 400,000 barrels per day in November.

Natural gas prices rose 2.6%. Energy companies have risen along with energy prices. Devon Energy gained 5.3%, the highest in the S&P 500. Marathon Oil was up 4.1%. The 10-year Treasury yield rose to 1.49% from 1.47% on Friday. On September 20, the yield was 1.31%. The rapid rise in interest rates has forced a rethink of whether stocks, especially already expensive tech companies, have become overvalued.

Investors are increasingly concerned about inflation as oil prices rise and companies continue to face supply issues that drive up their costs and force them to raise prices. Wall Street is also worried about the timing of the reduction in bond purchases by the Federal Reserve and its possible decision to increase its benchmark interest rate. You really have a lot of reasons the Band is trading defensively right now, ”said Julian Emanuel, chief equity and derivatives strategist at BTIG. “If you’re not going to see the bond market pick up and yields go down, then you’re likely to see more volatility in stocks,” he said. he said.

Investors are also gearing up for the latest round of corporate results, which will kick off in the coming weeks. They are also closely monitoring economic data for additional clues on the pace of the recovery as businesses and consumers grapple with the effects of COVID-19 and the highly contagious delta variant.

This week, Wall Street will learn more about the state of the economy. The Institute for Supply Management will release its September service sector index on Tuesday. The service sector represents the majority of the economy and its health is essential for growth.

The Labor Ministry will release its September employment report on Friday. The job market is struggling to fully recover from the effects of COVID-19, which occurred over a year ago.

Tesla stock remained slightly higher after the electric vehicle maker reported surprisingly strong third quarter deliveries. The stock rose 0.8 percent after rising 4 percent in the first half.

In Asia, the Hong Kong benchmark fell more than 2% after shares in struggling real estate developer China Evergrande were suspended. The majority of stocks in European markets edged up.

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