Stock market today: tech stocks tumble as U.S. political pressures weigh in
The stock market was down again on Monday, without much bad news. After a difficult September, several risks remain for the markets in October, which can also be a historically bad month for equities.
In the afternoon discussions, the
Dow Jones Industrial Average
was down 355 points, or 1%, after the index rose 482 points on Friday to close at 34,326.
fell by 1.5% and 2.3% respectively.
Technology stocks were particularly hard hit by the rise in bond yields. Rising yields often mean that investors expect inflation and strong economic demand in the future. The 10-year Treasury yield climbed to 1.5% from 1.48%.
Other areas of the market were not declining as much. The
Equal Weight Invesco S&P 500
The exchange-traded fund (RSP), which weights every holding in the index equally and reflects the size of rising or falling stocks, fell only 0.6%.
In general, the risks still have not gone away. Supply chain constraints prevent some companies from meeting their sales targets, while the associated higher costs weigh on profit margins. Higher corporate taxes could be on the way. Additionally, bond yields should continue to rise, making future earnings less valuable.
Analysts noted that the deadline for the US debt ceiling in December and the continued political dispute over the $ 1,000 billion infrastructure bill and $ 3.5 trillion reconciliation plan had confused the law. tracks.
“If the government were not able to raise or suspend the debt ceiling, the US Treasury would be unable to make any of its past due debt payments,” Jason Pride wrote, Director of Private Wealth Investments at Glenmede. This is partly why, according to Pride, short-term Treasury yields are higher; investors demand a yield premium on government bonds in the event of default. The 1-month Treasury yield is up slightly, reaching up to 0.2% from less than 0.1% on Friday.
As for the S&P 500, October can be a tough month, especially after a tough September. When the index drops in September, the S&P 500 is only up 54% from October historically, according to Bank of America, with an average decline of 0.4%. The bank said October was also one of the most volatile months.
Meanwhile, the S&P 500 is down just over 5% from its all-time high reached on September 2. Technically, a correction corresponds to a decrease of 10%. “I don’t think we’ve seen the bottom in equities yet,” wrote Jay Pestrichelli, CEO of ZEGA Financial. “While September’s stock declines were uncomfortable, they were a far cry from a traditional 10% market correction.”
The S&P 500 fell below the 4,300 level on Monday, a somewhat troubling sign. Buyers had stepped in last month when the index was slightly above that level, but a sharp move below could mean the index is poised to drop to 4,220, which would mark a 7% drop from the index’s all-time high, according to Fiona Cincotta, senior financial markets analyst at City Index.
More: Democrats Still Negotiating $ 3.5 Trillion Reconciliation Bill
Overseas, Hong Kong
Hang Seng Index
fell 2.2% as mainland Chinese markets were closed for holidays. The pan-European
was down 0.5%.
Hong Kong rocked as shares of heavily indebted real estate developer
(ticker: 3333.HK) were suspended “pending publication by the Company of an announcement containing inside information on a major transaction”. Reports have circulated in Chinese state media that a rival,
would buy a major Evergrande unit. Trading in the Hopson share (0754.HK) has also been halted.
Read also : The stock market has set aside Evergrande’s concerns for China. Why this is a mistake.
Here are nine actions in motion on Monday:
(NVAX) saw their shares fall 5.6% and 2.4%, respectively, after the announcement that
Johnson & johnson
(JNJ) is seeking approval from the Food and Drug Administration for its Covid-19 booster injection. Also,
(MRK) said on Friday that his oral treatment for Covid-19 was effective in reducing the risk of hospitalization. Merck stock rose 1.8%.
(BIIB) saw its shares drop 2.2% and 1.2%, respectively, even after companies announced the effectiveness of a new treatment for depression.
(TSLA) rose 0.5% after the electric vehicle group announced a record quarter on Saturday with shipments up 70% from a year ago.
The stock (AKAM) fell 2.1% after being downgraded to the sector weighting from overweighting to KeyBanc Capital Markets.
From the Pont de Nemours
The stock (DD) gained 2% after being overweight Neutral at JPMorgan.
Adidas slipped 2.3% (ADS.Germany), after the sportswear giant’s shares were lowered to Underperform by Bank of America.
Write to Jacob Sonenshine at [email protected]