US stocks tumble as rising returns weigh on tech / growth names

• The Nasdaq 100 was the worst-performing US major index on Wednesday, as Big Tech sold off amid rising yields.
• The shift into economic “reopening” stocks exacerbated this trend, while bad data weighed across the market.
• Remarks by Fed Chairman Powell will be closely watched as to how the bank could counter the rising yields.

The “reopening” operation was on the horizon in the US stock markets on Wednesday, and investors sold stocks that have benefited from the lockdown, including big tech companies like Microsoft (-%), Apple (-%). ) and Amazon (-%). in favor of stocks that are more likely to benefit from the economic reopening. The industrial sector of the S&P 500 reached all-time intraday highs.

Keep in mind that recent announcements from major US states in recent days (the governor of Texas pushing for a full reopening and both San Francisco and New York easing restrictions) are helping this trend, as So are probably US President Joe Biden’s comments in recent days, in which he has said that he expects all American adults to be offered their first vaccination by the end of May.

Rising long-term US bond yields further exacerbated selling pressure on tech names or, more generally, growth stocks (with a high price / earnings ratio); 10-year yields were up about 5 basis points on the day and 30-year yields were up about 4 basis points. The S&P 500 growth rate fell 2.5% on the day, while the S&P 500 value index remained flat.

Unsurprisingly, the downturn in big tech names and the high P / E ratio weighed the most on the Nasdaq 100 index, which sold throughout the session, dropping 2.9% to 12,600. The S&P 500 was also dragged 1.3% lower to 3,800, with key support at 3,800 looming. The Dow (which is less inclined towards technology) held up better, falling 0.4%. The CBOE Volatility Index (or VIX) rose 2.4 points to just over 26.50 and is now just over 2 points from February’s highs.

Bearish US ISM and ADP services PMI data on domestic employment exacerbated selling pressure on Wednesday. The Fed’s speech and the publication of the Fed’s Beige Book were largely ignored; The latter claimed that the US economic recovery continued at a modest pace in early 2021, with companies optimistic about the coming months and housing demand remained strong, although the improvement in the labor market was slow.