Stocks veer down as tech shares slump
A steep slide in technology stocks weighed on U.S. stocks Friday, pulling the market lower for the second day in a row.
Losses by retailers and by makers of packaged food, beverages and other consumer goods also helped weigh down the market. Banks rose as bond yields continued to climb, reflecting increasing investor concerns of higher inflation in the wake of rising prices for oil and other commodities.
“Higher commodity prices, a little bit more inflation pressure and higher interest rates — that sort of takes some wind out of the sails for equity markets, at least short-term,” said Edward Campbell, senior portfolio manager at QMA, a business unit of PGIM.
The Standard & Poor’s 500 index fell 22.99 points, or 0.9%, to 2,670.14. The Dow Jones industrial average slid 201.95 points, or 0.8%, to 24,462.94. The Nasdaq composite sank 91.93 points, or 1.3%, to 7,146.13. The Russell 2000 index of smaller-company stocks retreated 9.69 points, or 0.6%, to 1,564.12.
For every stock that rose on the New York Stock Exchange, two finished lower. Still, the major U.S. indexes finished the week with a gain.
“This is just the market taking a breather here in an up month,” Campbell said.
Bond prices continued to slide as yields rose. The yield on the 10-year Treasury rose to 2.96%, up from Thursday’s 2.91% and the highest level since January 2014.
The pickup in bond yields helped drive up bank stocks. When bond yields rise, that drives up interest rates on mortgages and other loans, which can translate into bigger profits for banks. Regions Financial shares climbed 4.1% to $18.89.
Technology stocks were the biggest contributor to the market decline Friday. The sector fell this week but is still up 4.4% this year. Apple led the slide Friday, finishing lower for the third day in a row. The stock sank 4.1% to $165.72.
Mattel was one of the biggest decliners among consumer-focused companies. The struggling toymaker slid 3.6% to $12.96 after announcing that CEO Margo Georgiadis is stepping down and is being succeeded by a company director and former studio executive.
Investors continued to weigh company earnings. The busiest stretch of the current earnings reporting season begins next week, but most of the S&P 500 companies that have reported results or outlooks so far have exceeded Wall Street’s projections.
There also have been some big disappointments.
On Friday, Stanley Black & Decker slid 6.7% to $144.21 after the tool company said commodities costs rose in the first quarter and sales of outdoor products got off to a slow start.
Skechers USA dived 27% to $30.70 after the footwear company issued a second-quarter forecast that was far weaker than analysts had expected.
Investors welcomed General Electric’s latest results, which topped analysts’ forecasts. The conglomerate’s shares climbed 3.9% to $14.54.
Pinnacle Foods jumped 9.7% to $60.58 after activist investment firm Jana Partners disclosed a 9.5% stake in the packaged foods company.
TransUnion leaped 10.4% to $66.84 after the credit reporting firm’s profit and sales beat expectations, as did its forecasts for the current quarter.
Crude oil prices reversed an early slide triggered by news that representatives from OPEC nations and allied oil ministers were meeting in Saudi Arabia to discuss their agreement to maintain cuts to production in a bid to keep prices up. Benchmark U.S. crude rose 9 cents to settle at $68.38 a barrel. Brent crude, used to price international oils, rose 28 cents to $74.06 a barrel in London.
“With commodity prices being up, that’s just more signs of inflation pressure and something for the markets to worry about a little bit more,” Campbell said.
Heating oil rose a penny to $2.12 a gallon. Wholesale gasoline rose 2 cents to $2.10 a gallon. Natural gas rose 8 cents to $2.74 per 1,000 cubic feet.
The dollar rose to 107.60 yen from 107.41 yen. The euro fell to $1.2283 from $1.2337. The pound fell to $1.4023 from $1.4078 after the Bank of England’s governor cast some doubts about the possibility of a rate increase next month.
Gold fell $10.50 to $1,338.30 an ounce. Silver fell 8 cents to $17.16 an ounce. Copper was little changed at $3.14 a pound.
UPDATES:
2:15 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 8:55 a.m.
