U.S. stocks dipped on Wednesday as bond yields climbed again, raising concerns about equity valuations and a pickup in inflation.
The S&P 500 traded 0.4% lower, while the Nasdaq Composite fell 0.8%. The Dow Jones Industrial Average gained 30 points.
The slight weakness came as the 10-year Treasury yield extended its gains. The 10-year Treasury yield gained more than 6 basis points to 1.47%. (One basis point is 0.01%) The yield surged to a high of 1.6% last week in a move that some described as a “flash” spike, raising concerns about higher borrowing costs and inflation.
President Joe Biden said late Tuesday that the U.S. will have a large enough supply of coronavirus vaccines to vaccinate every adult in the nation by the end of May. That would be two months ahead of schedule. The vaccine rollout is seen as key part in getting Americans back to work and for the economy to recover.
On Tuesday, the major averages gave back some their sharp gains from Monday. The Dow Jones Industrial Average lost 143 points, pressured by a 2.6% drop in Intel. The S&P 500 registered a loss of about 0.8%.
The Nasdaq Composite was the relative underperformer, dipping about 1.7% as Facebook, Microsoft, Amazon, Apple, Netflix and Google-parent Alphabet closed lower. The small-cap benchmark Russell 2000 dropped 1.93%.
“On a day with little major news and ahead of important news soon to come — Fed meeting and the jobs numbers— investors took the opportunity to take some profits from yesterday’s big recovery,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. Tuesday’s “worst performer, technology, was yesterday’s biggest winner.”
“Overall, buy on the dip is alive and well,” added Paulsen. “Despite a turbulent couple days, the S&P 500 has risen 1.55% so far this week dominated by reopening plays including materials, industrials, financials, and energy with technology being a market performer.”
Private companies added 117,000 new jobs in February, according to a report Wednesday from payroll processing firm ADP. Economists polled by Dow Jones expect 225,000 private jobs were added last month.
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