S&P 500 on track for the third week of descents, led by Tech

Contracts related to the heavy-duty Nasdaq-100 technology were relatively flat, indicating that the sector could have difficulty regaining its footing in the initial bell.

Shares have stumbled in recent weeks, as rising bond yields have called into question whether low interest rates, which drove higher valuations for much of last year, may continue for much longer. more time. Yields, which rise as bond prices fall, have intensified in response to expectations of an accelerated pace of growth and inflation as the economy reopens after the coronavirus pandemic.

The yield on 10-year Treasury bills was roughly flat on Friday, at 1.549%, compared to 1.547% on Thursday. This was the highest level of benchmark loan cost since February last year. The recent rise in yields came after Federal Reserve Chairman Jerome Powell provided no signal that the central bank would try to curb the rise when he spoke at The Wall Street Journal Jobs Summit.

“These are movements of profitability of the bonds. This is Jerome Powell, “said Edward Park, Brooks Macdonald’s chief investment officer.” There is a lot of uncertainty in the market right now about whether inflation is widely expected in the short term. sustained “.

Bond yields are likely to continue to rise and stocks remain nervous unless the Fed takes concrete steps to put a cap on yields, according to Mr. Park. “Markets are the most volatile when they are unsure of how monetary and fiscal policy will react.”

Technological actions have borne the brunt of the change in sentiment in recent weeks. The Nasdaq Composite Index, a closely monitored barometer for the sector, fell to its lowest level since Jan. 4 on Thursday. The index ended the day with a decrease of 9.7% compared to the maximum of February 12, placing it a short distance from the correction territory.

Ahead of the New York bell, Gap shares rose nearly 5%. The firm’s executives on Thursday finally predicted a rise in clothing sales during the second half of the year after a difficult 2020.

Broadcom shares fell nearly 2% in premarket trading after the company’s chip sales arrived just according to Wall Street estimates. Shares of energy companies, including Exxon Mobil and Occidental Petroleum, were boosted by rising oil prices following an unexpected decision by OPEC and its partners to renew production cuts in April.

Later, investors will analyze the February job report, which will be released at 8:30 am ET. The economy is expected to create 210,000 jobs last month. This would add to the signs of a slow improvement in the labor market, after data on Thursday showed that claims for unemployment benefits reached their lowest level in three months.

The jobs report may not have much of an impact on bond yields, as the data is unlikely to affect the progress of the Biden administration’s stimulus package across the Senate, Lyn Graham-Taylor said. Rabobank’s chief rate strategist. The Senate on Thursday advanced the $ 1.9 trillion bill after making a series of adjustments and is expected to give its approval in a few days.

Yields are likely to continue to advance, according to Mr. Graham-Taylor. “So far, the Fed has stressed that it doesn’t like it, but it’s pretty comfortable,” he said. “In the back of their minds, it’s natural for yields to rise a little: we’re not in the eye of the storm as we were.”

Oil prices rose a second day after OPEC and a Russian-led coalition of oil producers kept most of their production cuts in place, surprising the market. Brent crude, the benchmark in international energy markets, rose 2.7% to $ 68.52 a barrel.

Abroad, the Stoxx Europe 600 pancontinental fell 0.2%. Among individual stocks in the region, the London Stock Exchange Group fell 8.8% after profits fell below analysts ’forecasts in the second half and costs exceeded expectations.

Major Asian indices ended the day. Japan’s Nikkei 225 was down 0.2%, while Hong Kong’s Hang Seng index fell nearly 0.5%.

Write to Joe Wallace to [email protected]