NEW YORK – Rising bond yields spurred by concerns over inflation hammered tech stocks and sent Wall Street closing lower yesterday, while oil markets slid on fears of a renewed demand slump.
The tech-rich Nasdaq Composite Index slid 3.0% to close at 13,116.17, while the broad-based S&P 500 lost 1.5% to end at 3,915.46.
The benchmark Dow Jones Industrial Average fell 0.5% from its record close in the previous session to end at 32,862.17.
In oil markets, West Texas Intermediate lost 7.1% to end at US$60.00, while Brent North Sea crude fell 6.9% to close at US$63.28.
Traders have grappled in recent sessions with fears that a recovering US economy aided by massive government stimulus would bring with it inflation and force the Federal Reserve to end easy money policies rolled out early in the pandemic.
Fed Chair Jerome Powell on Wednesday signaled that would not happen anytime soon leading the Dow and S&P 500 to notch record closes, but an uptick in Treasury bond yields caused sentiment to reverse sharply in trading yesterday.
The 10-year US Treasury bond’s yield rose past 1.7%, and Quincy Krosby of Prudential said data showing the Philadelphia Federal Reserve Bank’s manufacturing index more than doubled from February, pushing prices up, helped convince traders that inflation may be near.
“Yesterday, the market appreciated that the Fed was acknowledging stronger growth but maintained its dovish accommodative position. Today, obviously, there is a rethink in the market,” Krosby said.
Oil markets had their eyes on different events, particularly the troubled rollout of the AstraZeneca Covid-19 vaccine in Europe, as well as US Energy Information Administration data showing crude stocks had reached their highest point since early December.
“The negative sentiment was triggered by doubts in Europe about the AstraZeneca vaccine and crystallized after the rise in US stocks,” said Louise Dickson of Rystad. – AFP, March 19, 2021
