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Tech Stocks Leading The Way Lower On Wall Street

wallstreet aug28 28sep21 lt

Stocks have moved sharply lower in morning trading on Tuesday after turning mixed over the course of the previous session. The major averages all slid firmly into negative territory, with the tech-heavy Nasdaq leading the way lower.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 354.30 points or 1 percent at 34,515.07, the Nasdaq is down 308.46 points or 2.1 percent at 14,661.51 and the S&P 500 is down 64.99 points or 1.5 percent at 4,378.12.

Technology stocks have helped lead the move to the downside on the day amid a continued advance by treasury yields.

Extending the upward move seen since last week's announcement from the Federal Reserve, the yield on the benchmark ten-year note has reached its highest levels in over three months.

The increase in treasury yields, which move opposite of bond prices, comes as the Fed has signaled plans to begin scaling back its asset purchases in the near future.

Also contributing to the continued advance by yields, Federal Reserve Chair Jerome Powell warned members of the Senate Banking Committee about upside risks to inflation during testimony this morning.

In prepared remarks, Powell predicted inflation will remain elevated in the coming months before moderating.

"As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors," Powell said.

He added, "These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal."

Powell warned supply bottlenecks, hiring difficulties, and other constraints could prove to be greater and more enduring as the economic reopening continues, posing upside risks to inflation.

"If sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal," the Fed chief said.

Adding to the negative sentiment on Wall Street, the Conference Board released a report unexpectedly showed a continued deterioration in U.S. consumer confidence in the month of September.

The Conference Board said its consumer confidence index tumbled to 109.3 in September from an upwardly revised 115.2 in August.

The decrease surprised economists, who had expected the index to inch up to 114.8 from the 113.8 originally reported for the previous month.

Software stocks have shown a substantial move to the downside in morning trading, dragging the Dow Jones U.S. Software Index down by 2.7 percent to its lowest intraday level in over a month.

Semiconductor and biotechnology stocks are also seeing considerable weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Significant weakness is also visible among steel stocks, as reflected by the 2.6 percent slump by the NYSE Arca Steel Index.

Retail, pharmaceutical and chemical stocks have also moved notably lower, while energy stocks are bucking the downtrend amid a modest increase by the price of crude oil.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index edged down by 0.2 percent, while China's Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has dipped by 0.3, the German DAX Index is down by 1.6 percent and the French CAC 40 Index is down by 2.2 percent.

In the bond market, treasuries are extending the notable downward move seen over the past several sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6 basis points at 1.544 percent.

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