Stocks were broadly down in afternoon trading on Wall Street on Monday, as bond yields continued to rise as investors expected the Federal Reserve to raise interest rates.
The S&P 500 was down 1.6% as of 12:02 p.m. ET. The Dow Jones Industrial Average fell 490 points, or 1.4%, to 35,742, while the Nasdaq lost 2.1%.
Technology stocks led losses again. The sector has been the biggest weight in the market as of January and is coming off its worst week since October 2020. Big tech stocks have a huge impact on the S&P 500 because of their sheer size. Coming into the year, the tech sector accounted for 29.2% of the S&P 500. Microsoft fell 2.3% and Apple fell 2.1%.
Wall Street is closely watching the Federal Reserve for clues about how soon it might raise interest rates. The central bank has said it will accelerate the reduction of bond purchases, which has helped keep interest rates low. Markets are now pricing in about a 78% chance that the Fed will raise rates by at least 25 percentage points in March. A month ago, it was about 36%.
Higher interest rates make stocks of expensive tech companies and other expensive growth companies less attractive to investors, which is why the sector has been sliding while bond yields have risen.
The 10-year U.S. Treasury yield rose to 1.79% from 1.76% late Friday.
Every sector in the benchmark S&P 500 fell, although sectors considered less risky, such as utilities and home-goods makers, outperformed the rest of the market.
Elsewhere in the market, a mix of trading news and financial updates drove several large-cap stocks.
Take-Two Interactive, maker of “Grand Theft Auto,” tumbled 14.1 percent after announcing it was buying Zynga, which makes “Words With Friends” and “Farmville.”
Sportswear maker Lululemon Athletica fell 5.4% after warning investors that a surge in virus cases hurt its fourth-quarter financial results. Cardinal Health, a maker and distributor of medical products, fell 7.5% after it said supply chain issues would hurt profits in its medical division.
Investors were busy with a week of economic reports and corporate earnings.
On Wednesday, the Labor Department will update Wall Street on how inflation is affecting prices with the December consumer price index. The agency will release details of how inflation is affecting businesses on Thursday to investors through its producer price index for December.
On Friday, Citigroup, JPMorgan and Wells Fargo will report their latest quarterly financial results.
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