Wall Street’s main indexes fell on Wednesday as a rise in U.S. Treasury yields pressured growth stocks, while the energy sector took a hit from a slide in oil prices.
Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Amazon.com Inc (AMZN.O) fell between 1% and 2.2% as the U.S. 10-year Treasury yield recovered from a brief fall to rise for a third straight session on Wednesday.
All the major S&P 500 (.SPX) sector indexes were lower. Energy stocks (.SPNY) were the biggest losers with a 2% drop as worries over demand in China weighed on oil prices.
Investors have been carefully assessing China’s move to reopen its COVID-battered economy against the backdrop of a surge in infections.
Tesla Inc (TSLA.O) was last up 1.2% in choppy trade, after hitting its lowest level in more than two years in the previous session. The stock is down nearly 69% for the year.
The benchmark S&P 500 (.SPX) is down 20% year-to-date and set for its biggest annual loss since the financial crisis of 2008. The rout has been more severe for the tech-heavy Nasdaq Composite (.IXIC), down 34% for the same period.
“What you’re hearing from investors is that recession is going to be a hard landing and there are other people who say we’ve already been in a recession,” said Nancy Tengler, chief executive officer at Laffer Tengler Investments in Scottsdale, Arizona.
Traders and analysts have also pointed to year-end tax-loss selling as one of the key headwinds for equities.
While recent data pointing to an easing in inflationary pressures has bolstered hopes of smaller rate hikes, a tight labor market and a resilient American economy have spurred worries that rates could stay higher for longer.
Markets are now pricing in 69% odds of a 25-basis point rate hike at the U.S. central bank’s February meeting and see rates peaking at 4.94% in the first half of next year. .
At 11:33 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 167.87 points, or 0.51%, at 33,073.69, the S&P 500 (.SPX) was down 24.08 points, or 0.63%, at 3,805.17, and the Nasdaq Composite (.IXIC) was down 90.78 points, or 0.88%, at 10,262.45.
Southwest Airlines Co (LUV.N) slipped 2.2% as the carrier came under fire from the U.S. government on Tuesday after it canceled thousands of flights.
Declining issues outnumbered advancers for a 2.63-to-1 ratio on the NYSE and 1.69-to-1 ratio on the Nasdaq.
The S&P index recorded seven new 52-week highs and four new lows, while the Nasdaq recorded 42 new highs and 289 new lows.
