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Market Snapshot: Dow edges lower as bond yields resume rise

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U.S. stocks edged lower Tuesday, with tech-related shares under pressure as Treasury yields saw a renewed rise.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    -0.13%

    fell 49.83 points, or 0.2%, to 33,121.54.
  • The S&P 500
    SPX,
    -0.36%

    was off 10.21 points, or 0.3%, at 3,960.88.
  • The Nasdaq Composite
    COMP,
    -0.66%

    shed 79.96 points, or 0.6%, to trade at 12,979.69.

On Monday, the Dow flipped positive in afternoon trade to end the day up 98.49 points, or 0.3%, to close at a record 33,171.37. The S&P 500 ended the session down 0.1%, while the Nasdaq Composite dropped 0.6% and the small-cap Russell 2000
RUT,
+0.15%

dropped 2.8%.

What’s driving the market?

A renewed selloff in U.S. Treasurys overnight was driving activity across markets Tuesday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.751%

early Tuesday traded above 1.77% for the first time since January 2020 and remained up 3.5 basis points near 1.75%, according to FactSet.

Rising yields were lifting the U.S. dollar and weighing on technology stocks and other growth-oriented shares. Technology and growth stocks are more sensitive to rising bond yields as the net present value of their future earnings growth is reduced more by the higher discount rate implied by rising bond yields.

“The latest moves seem tied to resurgent concerns around inflation. Market-based inflation measures have shot higher as well, perhaps as investors brace for Biden’s multi-trillion infrastructure announcement tomorrow,” said Marios Hadjikyriacos, investment analyst at XM, in a note. President Joe Biden is slated to unveil details of his infrastructure plan in a speech in Pittsburgh on Wednesday.

“Coming on top of the latest avalanche of federal spending, such an enormous investment package could turbocharge economic growth and by extension inflationary pressures,” he said.

Biden’s infrastructure plan, meanwhile, is expected to cost as much as $3 trillion to $4 trillion, offset by tax hikes of up to $3 trillion.

Read: Here’s what tax hikes could mean for the stock market as Biden pushes infrastructure plan

Meanwhile, investors were on the lookout for any further selling of stocks after a large margin call on equity derivatives held by Archegos Capital Management that forced an estimated $30 billion in block sales, triggering plunges in shares of widely held media companies whose stocks were liquidated. Big bank shares were also dented due to worries about their exposure to Archegos.

Read: Here are the complex bets at the heart of ‘unprecedented’ Archegos-linked $30 billion margin call

The Case-Shiller home price index for January showed an 11% year-over-year rise. A March consumer-confidence index is due at 10 a.m.

Randal Quarles, Fed vice chair for supervision, was scheduled to deliver remarks at 9 a.m., while New York Fed President John Williams is slated to speak at 2: 30 p.m.

Which companies are in focus?
How are other markets trading?

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