S&P 500 on track for third week of declines, led by technology

The contracts linked to the high-tech Nasdaq-100 were relatively stable, indicating that the sector may struggle to regain its balance in the opening bell.

The stock has plummeted in recent weeks, as a rise in bond yields has cast doubt on whether low interest rates, which spurred appreciation for much of last year, could continue for much longer. Yields, which rise with falling bond prices, have risen in response to expectations of a rapid pace of growth and inflation, as the economy reopens after the coronavirus pandemic.

Yield on 10-year Treasury notes was practically stable on Friday at 1.549%, compared to 1.547% on Thursday. This marked the highest level for the benchmark loan cost since February last year. The recent rise in yields came after Federal Reserve Chairman Jerome Powell gave no sign that the central bank would try to contain the rise when it spoke at The Wall Street Journal Jobs Summit.

“It is all about securities yield movements. It’s all about Jerome Powell, ”said Edward Park, chief investment officer at Brooks Macdonald. “There is a great deal of uncertainty in the market at the moment regarding inflation that is widely expected in the short term. it is transitory or if it is more sustained. “

Bond yields are expected to continue to rise and stocks may remain unstable unless the Fed takes concrete steps to limit yields, according to Park. “Markets are more volatile when they are not sure how monetary policy and fiscal policy will react.”

Technology stocks have been impacted by the change in sentiment in recent weeks. The Nasdaq Composite Index, a closely watched barometer for the sector, fell on Thursday to its lowest level since Jan. 4. The index ended the day with a 9.7% drop compared to the February 12 hike, slightly below the correction territory.

In the face of the New York bell, Gap’s shares rose almost 5%. Company executives on Thursday predicted a recovery in clothing sales in the second half of the year, after a difficult 2020.

Broadcom’s shares fell nearly 2% in the pre-market after the company’s chip sales were below Wall Street estimates. Shares in energy companies, including Exxon Mobil and Occidental Petroleum, received a boost from rising oil prices following an unexpected decision by OPEC and its partners to extend production cuts in April.

Investors will later review the February job report, which is due to be released at 8:30 am Eastern Time. The expectation is to show that the economy created 210 thousand jobs last month. That would increase signs of a slow improvement in the labor market, after data released on Thursday showed that unemployment insurance claims reached the lowest level in three months.

The jobs report may not have much influence on bond yields because the data is unlikely to affect the progress of the Biden government stimulus package in the Senate, said Lyn Graham-Taylor, senior rate strategist at Rabobank. The Senate advanced the $ 1.9 trillion bill on Thursday after making a series of adjustments, and is expected to pass it in a few days.

Yields are expected to continue to rise, according to Graham-Taylor. “So far, the Fed has emphasized that it is not loving it, but it is quite comfortable with it,” he said. “In the back of their heads, it is natural for yields to increase a little: we are not in the eye of the storm as we were.”

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

Abroad, the pan-continental Stoxx Europe 600 fell by 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.

The main Asian indices closed the day down. Japan’s Nikkei 225 fell 0.2%, while Hong Kong’s Hang Seng Index fell almost 0.5%.

Write to Joe Wallace at [email protected]