A slide in technology stocks left the S&P 500 slightly lower on Wall Street Tuesday, even as the Dow Jones Industrial Average marked another all-time high.
The S&P 500 slipped 0.1%, while the tech-heavy Nasdaq composite fell 1.3% after a day of choppy trading. The Dow rose 0.6%, thanks partly to solid gains by Caterpillar and JPMorgan Chase, which rose 5.4% and 3.8%, respectively.
Banks were among the biggest gainers as bond yields rose, pushing the yield on the 10-year Treasury to 1.65% from 1.63% late Monday. The yield was at 1.51% on Friday. When investors sell bonds their prices fall and their yields rise.
More than 65% of the stocks in the S&P 500 rose. Still, the slump in technology stocks, which are the most heavily weighted sector in the benchmark index, left the S&P 500 in the red. Microsoft fell 1.7%, Apple slid 1.3% and chipmaker Nvidia dropped 2.8%.
“Interest-rate sensitive sectors are up and those longer-term growth sectors are down today; not surprising, given the two-day move in the 10-year Treasury,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management. “You’re seeing investors price in fairly strong growth in inflation expectations for the future, or at least for 2022.”
The S&P 500 fell 3.02 points to 4,793.54. The Nasdaq slid 210.08 points to 15,622.72. The Dow gained 214.59 points to 36,799.65.
Smaller company stocks gave up a little ground. The Russell 2000 index fell 3.68 points, or 0.2%, to 2,268.87.
Stocks got 2022 off to a good start Monday, with the S&P 500 and Dow setting new highs. A mix of economic data and corporate quarterly earnings reports should give investors some insight into the impact that the coronavirus pandemic and persistently rising inflation are having on companies and consumers.
The job market will be a major focus for investors, starting with the Labor Department’s jobs report for December, which will be released Friday. On Tuesday, the agency’s monthly Jobs Openings and Labor Turnover Survey showed that a record 4.5 million American workers quit their jobs in November, a sign of confidence and more evidence that the U.S. job market is bouncing back strongly from last year’s coronavirus recession.
“Markets are going to be trying to look through the year,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “Right now, markets are cautiously confident.”
OPEC and allied oil-producing countries plan to stick with their road map to slowly restore cuts in output made during the depths of the pandemic, including adding 400,000 barrels per day in February.
Some sectors of the economy are still struggling, especially with supply chain problems. Growth in manufacturing slowed in December to an 11-month low, according to The Institute for Supply Management, a trade group of purchasing managers. The organization will release its December report for the service sector on Thursday.
Investors are also anticipating the minutes from the Federal Reserve’s latest policy meeting in December, set for release on Wednesday. The central bank plans to hasten the withdrawal of its support for the markets and economy in the face of rising inflation. It will speed up its withdrawal of bond purchases that have helped keep interest rates low, and investors are closely watching the Fed for any signals on when it will eventually raise its benchmark interest rate.
“The big question is how worried is the Fed about inflation,” McMillan said. “We’re really on the cusp of seeing how the Fed is going to move and the minutes will be informative about that.”
Walgreens, Constellation Brands and Conagra report their latest quarterly earnings on Thursday.