OCTOBER 10, 2018
Stocks fell sharply Wednesday, led by a steep decline in tech shares.
The Dow traded 400 points lower as Intel and Microsoft tumbled. The Nasdaq sank 2 percent.
The S&P 500 dropped 1.4 percent, with the tech and industrials sectors underperforming. The broad index was also headed for a five-day losing streak and fell below its 50-day moving average, a widely followed technical level.
Shares of Amazon, Netflix, Facebook and Apple fell sharply.
Worries about a sharp rise in interest rates also pressured equities. The 10-year Treasury note yield traded around 3.23 percent a day after hitting its highest level since 2011. The two-year yield, meanwhile, reached its highest mark since 2008.
“Portfolio managers tend to move to the sidelines in a skittish tape out of fear of suffering from a quick and sharp pullback,” said Jeremy Klein, chief market strategist at FBN Securities.
“The fundamental environment, though, remains supportive of share appreciation. I contend that the concerns of rising interest rates are largely overblown. Specifically, I do not anticipate much more of an increase in longer dated Treasury yields,” he said.
Bank shares traded higher as yields rose. Citigroup and Bank of America gained 0.4 percent and 0.3 percent, respectively. Wells Fargo also rose about half a percent.
Rates rose on Wednesday after the U.S. government released data showing a rebound in producer prices last month. The producer price index rose 0.2 percent in September and is up 2.8 percent on a year-over-year basis. The index is a widely followed metric of inflation.
The recent rise in rates comes ahead of the start of the latest earnings season. Banks like Citigroup and Wells Fargo are scheduled to report later this week. Overall, analysts polled by FactSet expect third-quarter earnings to have risen by 19 percent on a year-over-year basis.
Stocks also fell as their European counterparts dropped on worries over Italy’s budget. The Stoxx 600 index fell more than half a percent, while the German Dax dropped 0.8 percent. France’s CAC 40, meanwhile, pulled back more than 1 percent.
Courtesy/Source: CNBC
