(Bloomberg) — Tech shares led a decline in U.S. stocks amid concern that valuations had gotten out of hand amid higher bond yields and bets on faster inflation.
The Nasdaq 100 was about 1.5% lower midday and headed to its longest losing streak since 2019, but off the worst of its losses after Chairman Jerome Powell signaled the Federal Reserve was nowhere close to pulling back on its support for the U.S. economy. Airlines, lodging companies and cyclical shares set to benefit from the end of pandemic lockdowns outperformed, limiting losses for the Dow Jones Industrial Average. A similar rotation was underway in European stocks.
So-called growth shares are having their worst month against value counterparts in more than two decades as vaccination campaigns gather pace and bond yields hover near a one-year high. Bets on faster growth have pushed the gap between 5- and 30-year yields to the highest level in more than six years.
Investors are growing concerned that broad equity benchmarks have already priced in much of the prospective global recovery spurred by vaccines and U.S. stimulus. As Powell reassured investors on stimulus, he voiced expectations for a return to more normal, improved activity later this year and said that higher bond yields reflected economic optimism.
“We’re starting to see some people take some money off the table,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “The side of the market that has been so overvalued for so long is the tech side and those bigger growth names, so we’re seeing some rotation.”
Elsewhere, stocks in Asia were mostly higher. Bitcoin retreated below $50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s rally.
Some key events to watch this week:
EIA crude oil inventory report is out Wednesday.Finance ministers and central bankers from the Group of 20 will meet virtually Friday. U.S. Treasury Secretary Janet Yellen will be among the attendees.
These are some of the main moves in markets:
Stocks
The S&P 500 Index declined 0.8% as of 11:47 a.m. New York time.The Stoxx Europe 600 Index fell 0.4%.The MSCI Asia Pacific Index was little changed.The MSCI Emerging Market Index fell 0.4%.
Currencies
The Bloomberg Dollar Spot Index fell 0.1%.The euro fell 0.1% to $1.2148.The British pound rose 0.2% to $1.4097.The Japanese yen fell 0.1% to 105.18 per dollar.
Bonds
The yield on 10-year Treasuries fell one basis point to 1.35%.Germany’s 10-year yield jumped two basis points to -0.32%.Britain’s 10-year yield rose four basis points to 0.71%.
Commodities
West Texas Intermediate crude fell 0.2% to $61.49 a barrel.Gold fell 0.2% to $1,806.17 an ounce.
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