Freefalling tech stocks weigh on S&P 500 even as Dow wins

A drop in tech stocks left the S&P 500 down slightly on Wall Street on Tuesday, even as the Dow Jones Industrial Average marked another all-time high.

The S&P 500 slipped 0.1%, while the highly technical Nasdaq composite fell 1.3% after a choppy trading day. The Dow Jones rose 0.6%, in part due to strong gains from Caterpillar and JPMorgan Chase, which rose 5.4% and 3.8% respectively.

Banks were among the biggest winners as bond yields rose, pushing the 10-year Treasury yield to 1.65% from 1.63% on Monday night. The yield was 1.51% on Friday. When investors sell bonds, their prices go down and their yields go up.

Over 65% of S&P 500 stocks rose. Still, the fall in tech stocks, which are the most weighted sector in the benchmark, left the S&P 500 in the red. Microsoft fell 1.7%, Apple slipped 1.3%, and chipmaker Nvidia fell 2.8%.

“Interest rate sensitive sectors are on the rise and these long-term growth sectors are on the decline today; this is not surprising, given the two-day move in the 10-year Treasury,” said Tom Hainlin, National Investment Strategist at US Bank Wealth Management. “You see investors factor in fairly strong growth in inflation expectations going forward, or at least 2022.”

The S&P 500 lost 3.02 points to 4,793.54. The Nasdaq slipped 210.08 points to 15,622.72. The Dow Jones gained 214.59 points to 36,799.65.

Small business stocks lost some ground. The Russell 2000 Index lost 3.68 points, or 0.2%, to 2,268.87.

Stocks got off to a good start to 2022 on Monday, with the S&P 500 and the Dow reaching new highs. A mix of economic data and quarterly corporate earnings reports should give investors a glimpse of the impact of the coronavirus pandemic and the persistent rise in inflation on businesses and consumers.

The job market will be a priority for investors, starting with the Labor Ministry’s employment report for December, which will be released on Friday. On Tuesday, the agency’s monthly survey of job openings and workforce turnover showed that a record 4.5 million American workers left their jobs in November, a sign confidence and further proof that the U.S. labor market is rebounding strongly from last year’s coronavirus recession.

“The markets are going to try to watch throughout the year,” said Brad McMillan, director of investments for Commonwealth Financial Network. “Right now, the markets are cautiously confident.”

OPEC and allied oil-producing countries plan to stick to their roadmap to slowly restore production cuts made at the height of the pandemic, including adding 400,000 barrels per day in February.

Some sectors of the economy are still struggling, especially with supply chain issues. Growth in the manufacturing sector slowed in December to an 11-month low, according to the Institute for Supply Management, a professional group of purchasing managers. The organization will release its December report for the services sector on Thursday.

Investors are also awaiting the minutes of the Federal Reserve’s last policy meeting in December, due for release on Wednesday. The central bank plans to accelerate the withdrawal of its support to the markets and the economy in the face of rising inflation. It will accelerate its withdrawal from bond purchases that have helped keep interest rates low, and investors are watching the Fed closely for any signals on when it will possibly raise its benchmark interest rate.

“The big question is how concerned the Fed is about inflation,” McMillan said. “We’re very close to seeing how the Fed plays out and the minutes will be instructive on that.”

Walgreens, Constellation Brands and Conagra released their latest quarterly results on Thursday.

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