Published: Wed, May 16, 2018
Finance | By Claude Patterson

Tech leads stocks lower; bond yields rise

Tech leads stocks lower; bond yields rise

On Tuesday, the bond market appeared to hold investors' focus.

Banks, which stand to prosper because of higher interest rates on loans, bucked the downward trend. The S&P 500 erased 18.68 points, or 0.68 percent, to 2,711.45. Capital One Financial stock rose 1.6 percent. Meanwhile the Nasdaq Composite declined 59.69 points, or 0.8% to 7,351.63.

The Dow lost 193 points, or 0.8 percent, to 24,706.

"We're of the view that we're not in a high-rate environment, we're in a less-low rate environment, " said Erik Davidson, chief investment officer at Wells Fargo Private Bank.

THE QUOTE: "There's a number of data releases that will grab traders' attention today and could determine whether we see an early rebound in stock markets".

Retail sales reported a monthly increase of 0.3%. The yield on the 10-year Treasury rose to 3.07 percent from 3 percent late Monday.

Higher borrowing costs sent stocks sharply lower. Bond yields tend to rise when investors expect faster economic growth and higher inflation. Small-company stocks also rose. Essex Property Trust fell 3 percent to $234.69. Higher mortgage rates can make it harder for would-be buyers to purchase a home. Mortgage rates, which have been rising this year, tend to track the movement in the 10-year Treasury yield.

The slide comes in the midst of a strong May for stocks. The Nasdaq is up 4 percent. Sectors leading losses for the day included real estate, health care and technology. Acacia Communications jumped 9.6 percent. "The most notable of these is the retail sales data for April, which is expected to be relatively good for a second consecutive month following a few poor numbers that were a little worrying", Craig Erlam, a senior market analyst for Oanda, said in a commentary. Ulta Beauty added 1.1 percent to $249.64. Brent crude, used to price worldwide oil, gained 77 cents to $79.00 a barrel in London.

METALS: Precious metals prices slumped as the dollar strengthened.

The S&P 500 index rose 9 points, or 0.3 percent, to 2,736. Silver dropped 38 cents, or 2.3 percent, to $16.27 an ounce. The Nasdaq climbed 8 points, or 0.1 percent, to 7,411. In Asia, Japan's benchmark Nikkei 225 edged down 0.2 percent.

Small-company stocks fell. The Russell 2000 lost 6 points, or 0.4 percent, to 1,600.

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