Pedestrians pass the New York Stock Exchange, Wednesday, Jan. 27, 2021, in New York. (AP Photo/John Minchillo, File)
By Damian J. Troise and Alex Veiga
Technology companies helped drag U.S. stocks broadly lower Monday, pulling the indexes below the record highs they reached last week.
The S&P 500 dropped 0.5%, shedding more than a third of its gain from last week. Tech stocks were the biggest weight on the market, but the losses were shared broadly by a mix of banks, energy companies and others that rely on direct consumer spending. Chipmaker Intel fell 1.7%, Capital One lost 0.9% and Valero Energy slid 2.3%. Only real estate stocks eked out a gain.
The pullback came as bond yields mostly moved higher after easing last week. Rising bond yields tend to make shares in technology companies that have had a strong runup over the past year look too expensive.
“What we’re seeing in the markets today is that bond yields, after falling last week, are back to rising again,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “And you can see that negative correlation between rising bond yields and declining prices in technology is still with us.”
The S&P 500 fell 22.21 points to 4,163.26. The benchmark index is coming off its fourth straight weekly gain. The Dow Jones Industrial Average lost 123.04 points, or 0.4%, to 34,077.63. Both the S&P 500 and Dow hit all-time highs on Friday.
The tech-heavy Nasdaq composite slid 137.58 points, or 1%, to 13,914.77, while the Russell 2000 index of smaller companies fell more than the broader market, shedding 30.67 points, or 1.4%, to 2,232.
Stocks have rallied in recent weeks amid a string of encouraging reports on hiring, consumer confidence and spending that point to an accelerating U.S. economy. COVID-19 vaccinations and massive support from the U.S. government and Federal Reserve are fueling expectations for solid corporate profit growth as more businesses reopen after being forced to close or operate on a limited basis due to the pandemic.
A good amount of investor attention is focused on the bond market as government stimulus and the recovering economy have led to concerns about inflation. The yield on the 10-year Treasury note rose to 1.60% from 1.57% late Friday.
Even so, company earnings are front and center this week, as investors look to justify the recent rise in stock prices with the profits needed to keep the market fueled in this recovery. On average analysts are expecting profits across the S&P 500 to be up 24% from a year earlier, according to FactSet.
The busiest stretch for quarterly results begins this week, with 81 out of the 500 members of the S&P 500 due to report results, as well as 10 out the 30 members of the Dow, including Johnson & Johnson, Verizon Communications and Intel.
Coca-Cola added 0.6% Monday after beating Wall Street's first-quarter profit forecasts and giving investors an encouraging update on improving sales. Harley-Davidson jumped 9.7% after handily beating analysts' profit forecasts.
“Investors want to see validation of this very sharp positive economic momentum that is starting to get priced in,” Sunitha Thomas, national portfolio advisor at Northern Trust Wealth Management. “They want to see that earnings momentum is really there for the rest of the year.”
Outside of earnings, several stocks made big moves Monday.
Tesla dropped 3.4% after two people ere killed in Texas in a crash of one of its models. Authorities say there was no one in the driver’s seat at the time of the crash. It’s not clear whether the car’s driver-assist system was being used.
Peloton slid 7.3% after regulators issued a safety notice over the exercise equipment company’s new treadmill. The company hasn’t been forced to recall the treadmill, and it’s fighting the issue.
Altria Group slumped 6.2% following a published report that the Biden administration is considering requiring tobacco companies to reduce the nicotine level of cigarettes sold in the U.S.
A rare magnum of Dom Pérignon Vintage 1961 champagne that was specially produced for the 1981 wedding of Prince Charles and Lady Diana has failed to sell during an auction. Danish auction house Bruun Rasmussen handled the bidding Thursday. The auction's house website lists the bottle as not sold. It was expected to fetch up to around $93,000. It is one of 12 bottles made to celebrate the royal wedding. Little was revealed about the seller. The auction house says the bids did not receive the desired minimum price.
The New York Times and President Donald Trump are fighting again. The news outlet said Wednesday it won't be deterred by Trump's “false and inflammatory language” from writing about the 79-year-old president's health. The Times has done a handful of stories on that topic recently, including an opinion column that said Trump is “starting to give President Joe Biden vibes.” In a Truth Social post, Trump said it might be treasonous for outlets like the Times to do “FAKE” reports about his health and "we should do something about it.” The Republican president already has a pending lawsuit against the newspaper for its past reports on his finances.
OpenAI has appointed Slack CEO Denise Dresser as its first chief of revenue. Dresser will oversee global revenue strategy and help businesses integrate AI into daily operations. OpenAI CEO Sam Altman recently emphasized improving ChatGPT, which now has over 800 million weekly users. Despite its success, OpenAI faces competition from companies like Google and concerns about profitability. The company earns money from premium ChatGPT subscriptions but hasn't ventured into advertising. Altman had recently announced delays in developing new products like AI agents and a personal assistant.
President Donald Trump says he will allow Nvidia to sell its H200 computer chip used in the development of artificial intelligence to “approved customers” in China. Trump said Monday on his social media site that he had informed China’s leader Xi Jinping and “President Xi responded positively!” There had been concerns about allowing advanced computer chips into China as it could help them to compete against the U.S. in building out AI capabilities. But there has also been a desire to develop the AI ecosystem with American companies such as chipmaker Nvidia.
U.S. sports betting is booming as NFL and college football fuel massive activity. BetMGM CEO Adam Greenblatt breaks down trends, growth, and what’s next.
President Donald Trump says a deal struck by Netflix last week to buy Warner Bros. Discovery “could be a problem” because of the size of the combined market share. The Republican president says he will be involved in the decision about whether federal regulators should approve the deal. Trump commented Sunday when he was asked about the deal as he walked the red carpet at the Kennedy Center Honors. The $72 billion deal would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.
Disney's changes to a program for disabled visitors are facing challenges in federal court and through a shareholder proposal. The Disability Access Service program, which allows disabled visitors to skip long lines, was overhauled last year. Disney now mostly limits the program to those with developmental disabilities like autism who have difficulty waiting in lines. The changes have sparked criticism from some disability advocates. A shareholder proposal submitted by disability advocates calls for an independent review of Disney's disability policies. Disney plans to block this proposal, claiming it's misleading. It's the latest struggle by Disney to accommodate disabled visitors while stopping past abuses by some theme park guests.
