Tech weakness keeps Wall Street under pressure
Wall Street's main indexes slipped on Tuesday, with the Nasdaq lagging the most as rising Treasury yields weighed on major technology stocks, while gains in banking and energy stocks helped limit broader market losses.
The S&P 500 energy index jumped 2.7% as oil prices rose after a move by the United States and other consumer nations to release oil from their reserves to try to cool the market fell short of some expectations. [O/R]
The S&P banks subindex rose 1.3%, extending Monday's gains, with Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC) rising more than 1% each as investors ramped up expectations for interest rate hikes next year after Jerome Powell was nominated as Fed Chair for a second term.
The S&P tech sector, however, sank 0.9% as rising yields dented appeal of the high-growth sector.
"It's possible that interest rates will be moved higher earlier than expected," said Rick Meckler, partner at Cherry Lane Investments In New Vernon, New Jersey.
"But that result, while positive for bank stocks, is not positive for the rest of the stock market, particularly technology, which trades on very high price/earnings multiples."
An IHS Markit survey showed U.S. business activity slowed moderately in November amid labor shortages and raw material delays, but remained comfortably in expansion territory on strength in the manufacturing sector.
The Nasdaq and the S&P 500 had slipped from record highs on Monday, as Powell's nomination prompted a volatile session.
The CBOE volatility index briefly rose to a more than one-month high earlier on Tuesday. With the Thanksgiving holiday expected to keep volumes low this week, markets could see high volatility.
At 10:27 a.m. ET, the Dow Jones Industrial Average was down 26.18 points, or 0.07%, at 35,593.07 and the S&P 500 was down 12.08 points, or 0.26%, at 4,670.86. The Nasdaq Composite was down 110.84 points, or 0.70%, at 15,743.92.
Among other stocks, Zoom Video Communications (NASDAQ:ZM) Inc fell 16.9% after its third-quarter revenue growth rate slowed to 35% as demand for its video-conferencing tools eased from pandemic-fueled heights last year.
XPeng Inc rose 10.1% on the electric vehicle maker's upbeat third-quarter results and outlook. Most other EV makers, including Tesla (NASDAQ:TSLA) Inc and Lucid Group, fell.
Best Buy Co Inc (NYSE:BBY) slid 15.9% after the electronics retailer forecast fourth-quarter comparable sales below expectations due to supply chain issues.
Chipmakers Micron Technology (NASDAQ:MU) and Western Digital Corp (NASDAQ:WDC) rose 2.4% and 6.6%, respectively, outpacing their peers after Mizuho upgraded the stocks to "buy" from "neutral".
Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE and a 1.28-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and four new lows, while the Nasdaq recorded 27 new highs and 240 new lows.