Technology stocks opened lower in US trading on Monday, while government bonds extended their declines, as investors awaited inflation data and the start of earnings season.
The Nasdaq Composite Index is down 1.1%, indicating renewed pressure on the technology sector. Last week, the benchmark index posted its biggest one-week percentage drop since February, as rising bond yields breached technical valuations. The S&P 500 lost 0.7% and the Dow Jones industrial index fell 0.4%.
In individual stocks, Take-Two Interactive fell 10% after the video game maker agreed to buy Zynga in a $12.7 billion deal. Zynga is up more than 40%. Lululemon fell 8% after saying that fourth-quarter earnings will fall toward the bottom line of expectations.
Nvidia chip companyAnd
One of the best performing stocks in 2021, down 3.7% in active trading. Jim StopAnd
A favorite of retail traders, it lost 5%, having jumped last week after the Wall Street Journal reported that it plans to enter the cryptocurrency and non-perishable token markets.
The technical losses came as the yield on the benchmark 10-year Treasury bond – which moves inversely to its price – rose to 1.8% on Monday from 1.769% on Friday. Friday’s closing level was the highest since January 2020, when yields plummeted at the start of the pandemic.
Rising revenue at the start of 2022 sent tech stocks reeling. Increased yields are indications that the Fed may raise short-term interest rates in March and begin reducing its holdings of bonds and other assets soon thereafter.
Expectations of a central bank stimulus cut have also pushed up yields in Europe in recent weeks as well. Among the region’s major 10-year government bonds, only German bonds trade at negative yields, according to Tradeweb..
US inflation data released on Wednesday will be watched with interest as investors seek to forecast when the Federal Reserve will start raising borrowing costs. Monthly consumer prices are expected to rise more than 7% from the previous year, for the first time since 1982.
Later this week, the fourth-quarter earnings season kicks off at major US financial firms, with JPMorgan Chase and Citigroup Inc.And
Wells Fargo and BlackRock because of the file’s results. Many investors pay money into bank stocks, seeing that they can profit from higher interest rates.
Among them is Hani Reda, a multi-asset fund manager at PineBridge Investments. He said the New York-based investment firm reduced its ownership of technology stocks and Treasurys while boosting its cash holdings and exposure to financial firms.
“Stocks are down and bonds are down as well,” Mr. Raza said. “At least for a while, even cash is better than owning risky assets.”
In commodities, US natural gas prices rose 4.1% to $3.88 per million British thermal units. Cold weather in the Midwest and eastern United States early this week is likely to increase fuel demand, according to analysts at NatGas Weather.
Stock markets abroad were mixed. The Stoxx Europe 600 Index fell 0.7%, dragged down by real estate and technology stocks. Shares in Atos fell 17% after the French IT company said its 2021 results were later than expected due to project delays and supply chain challenges.
The Shanghai Composite added 0.4% and Hong Kong’s Hang Seng Index rose 1.1%. Japanese markets were closed for a public holiday.
Mark Andersen, head of asset allocation in the principal investment office at UBS Global Wealth Management, said he favors European, Japanese, energy and financial stocks.
“The Fed clearly wants to tighten financial conditions, and the way to do that is obviously by raising interest rates,” he said.
Write to Joe Wallace at email@example.com
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