US Stocks Turn Lower; Bonds Slip 02/26 09:48
Stocks gave up an early gain and turned mostly lower in morning trading on
Wall Street Friday. Banks and energy companies led the way lower, while
technology companies, which had been beaten down in recent days, started to
(AP) -- Stocks gave up an early gain and turned mostly lower in morning
trading on Wall Street Friday. Banks and energy companies led the way lower,
while technology companies, which had been beaten down in recent days, started
Investors continued to watch the bond market, where Treasury yields were
declining, as well as Washington, where Congress is expected to vote on
President Joe Biden's stimulus package.
The S&P 500 index was down 0.9% as of 10:30 a.m. Eastern. The Dow Jones
Industrial Average was down 1.4%. The technology-heavy Nasdaq was down 0.6%.
A sell-off on Wall Street Thursday picked up speed when the yield on the
10-year U.S. Treasury note rose above 1.5%, a level not seen in more than a
year and far above the 0.92% it was trading at only two months ago. That move
raised the alarm that yields, and the interest rates they influence, will move
higher from here.
Bond yields were easing off of their multi-week climb. The yield on the
10-year U.S. Treasury note fell to 1.49%.
The recent rise in bond yields reflects growing confidence that the economy
is on the path to recovery, but also expectations that inflation is headed
higher, which might prompt central banks eventually to raise interest rates to
cool price increases. Rising yields can make stocks look less attractive
relative to bonds, which is why every tick up in yields has corresponded with a
tick down in stock prices.
Technology stocks have been impacted more than the broader market by the
rise in bond yields. Technology stocks tend to trade at higher valuations than
the overall market. Investors are also betting that with vaccinations, the
coronavirus pandemic may be coming to an end which would pivot consumer
behavior away from online-only shopping.
In Washington, Democrats in Congress are preparing to move forward with
President Biden's $1.9 trillion stimulus package, with a vote in the House of
Representatives planned for Friday. The Senate could vote on the package as
early as next week.
The stimulus bill would include yet another round of one-time payments to
most Americans, including an expansion of other refundable tax credits like the
child tax credit, as well as additional aid to state and local governments to
combat the pandemic.