S&P 500 hits one-year low as higher bond yields pressure growth stocks

Might 9 (Reuters) – The S&P 500 index fell to its lowest since April 2021 on Monday as increased U.S. Treasury yields hit development shares amid prospects of aggressive coverage tightening, whereas traders grappled with fears of a pointy financial slowdown in China.

All the 11 main S&P sectors declined. The vitality (.SPNY) sector tumbled 6% on the again of a 2% drop in oil costs, as weak China knowledge and a tighter COVID-19 lockdown in Shanghai deepened fears of a possible international slowdown. GLOB/MKTS

The tech-heavy Nasdaq (.IXIC) dropped 3.1% to its lowest stage since Nov 2020 as megacap shares Microsoft Corp (MSFT.O), Amazon.com (AMZN.O), Apple Inc (AAPL.O), Google-owner Alphabet Inc (GOOGL.O), Meta Platforms (FB.O) and Tesla Inc (TSLA.O) fell between 1.6% and 6.2%.

Chipmakers (.SOX) dropped 4%.

Benchmark 10-year U.S. Treasury yields had been at 3.08% after hitting their highest ranges since November 2018 earlier within the session as expectations of upper rates of interest unnerved traders.

After a 50 foundation factors enhance in rates of interest this month by the U.S. central financial institution, many merchants count on a hike of one other 75 foundation factors on the June assembly. IRPR

“The priority right here is that the Federal Reserve goes to primarily ignore market situations and fairness market volatility and proceed on with price hikes,” stated Matt Stucky, senior portfolio supervisor at Northwestern Mutual Wealth Administration.

At 11:52 a.m. ET, the Dow Jones Industrial Common (.DJI) was down 486.39 factors, or 1.48%, at 32,412.98, the S&P 500 (.SPX) was down 93.43 factors, or 2.27%, at 4,029.91, and the Nasdaq Composite (.IXIC) was down 373.29 factors, or 3.07%, at 11,771.38.

Traders will preserve an in depth eye on U.S. inflation knowledge for April for clues on whether or not value pressures are reaching a peak.

“It’s important to look fairly arduous for constructive catalysts within the present market surroundings,” stated Brian Worth, head of funding administration, Commonwealth Monetary Community.

“Any constructive developments on the geopolitical entrance, or a weaker than anticipated CPI report later this week, might assist flip the tide and see traders embrace threat property as soon as once more.”

Know-how-focused development shares have borne the brunt of the selloff this 12 months as their returns and valuations are discounted extra deeply when yields rise.

The S&P 500 development index (.IGX) has dropped 23.4% to this point this 12 months, in comparison with a 15.5% fall within the benchmark index (.SPX).

The primary-quarter earnings season is on its last leg, with practically 80% of the 434 S&P 500 firms which have reported outcomes to this point topping estimates, in keeping with Refinitiv.

Twitter Inc (TWTR.N) slipped 2.2% as Hindenburg Analysis took a brief place on the social media firm’s inventory, saying the corporate’s $44 billon deal to promote itself to Elon Musk has a major threat of getting repriced decrease. learn extra

Declining points outnumbered advancers for a 7.03-to-1 ratio on the NYSE and for a 5.36-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 66 new lows, whereas the Nasdaq recorded 11 new highs and 1,030 new lows.

Reporting by Devik Jain and Amruta Khandekar in Bengaluru; Modifying by Shounak Dasgupta and Anil D’Silva

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