- Big tech weighed down by higher US Treasury yields
- Semis index posts eighth decline in nine; worst week since April
- For the first time in 2023, Nasdaq publishes two consecutive lower weeks
- Friday index: Dow up 0.3%, S&P down 0.11%, Nasdaq down 0.56%
- Weekly ratings: Dow up 0.62%, S&P down 0.31%, Nasdaq down 1.9%
Aug 11 (Reuters) – The S&P 500 and Nasdaq Composite fell on Friday, posting their second straight weekly losses, as hotter-than-expected U.S. producer price data drove higher government yields and lower interest-sensitive megacap growth stocks.
The Dow Jones Industrial Average closed higher for the day and ended the week up 0.6%. It was the first time in 2023 that the Nasdaq fell for two consecutive weeks. The S&P 500 ended the week down 0.3%, with the Nasdaq 1.9% lower.
The US government reported that the producer price index (PPI) climbed 0.8% in the 12 months to July, up from a 0.2% increase the previous month, as the cost of services rose. Economists polled by Refinitiv had expected a 0.7% increase.
Although currency traders broadly expect the Federal Reserve to refrain from tightening credit conditions for the rest of the year, bets on no rate hike in September fell to 88.5% from 90% before the data hit. IRPR
“We’ve seen some important news and data in recent days but the market has chosen to trade sideways, which tells us the market had priced everything in and wasn’t positively or unpleasantly surprised,” said Jason Betz, private wealth advisor at Ameriprise Financial.
The yield on the two-year US Treasury note, which moves in line with expectations for short-term interest rates, climbed to 4.88%.
The move weighed on big tech names, as high interest rates could slow the economy and lower those companies’ ability to achieve the growth projections that have driven them to premium valuations. Higher interest rates can also make interest-bearing bonds an attractive alternative to stocks for some risk-averse investors.
Tesla (TSLA.O)Meta Platforms Inc (META.O) and Microsoft (MSFT.O) closed down between 0.6% and 1.3%.
A decrease of 3.6% in Nvidia (NVDA.O) weighted on semiconductor index (.SOX), which was 2.3% lower. It was the fourth straight decline and its eighth loss in nine sessions for the semi-index, and its 5% weekly drop was its worst performance since early April.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2023. REUTERS/Brendan McDermid//File Photo
Megacap growth and technology stocks have led to outsized gains this year in the tech-heavy Nasdaq (.IXIC) and the S&P 500 (.SPX). But after five months of progress, August has so far been marked by a more cautious approach from investors.
“Time will tell if we’re right about this, but with the rise that technology has had, it’s hard not to want to make a little profit,” said Ameriprise’s Betz.
Dow Jones Industrial Average (.DJI) rose 105.25 points, or 0.3%, to 35,281.4, the S&P 500 (.SPX) lost 4.78 points, or 0.11%, to 4,464.05 and the Nasdaq Composite (.IXIC) fell 76.18 points, or 0.56%, to 13,644.85.
Among the major S&P sectors, health care (.SPXHC) and energy (.SPNY) advanced sectors. Both have been among the worst-performing industries this year, although energy matched its strongest performance of the year by closing higher for a seventh straight session.
The energy sector’s 1.6% increase was helped by further gains in crude oil prices forecasts for austerity deliveries from the International Energy Agency. Occidental Petroleum Corp (OXY.N) was among the biggest winners, up 3.3%, after one of its units secured a grant from the US government to support its decarbonisation ambitions.
Among other movers, News Corp (NWSA.O) rose 4.6% after the Rupert Murdoch-owned media conglomerate beat quarterly profit estimates, thanks to its cost-cutting efforts.
US-listed shares of Chinese companies Alibaba and JD.com fell 3.5% and 5.3% respectively, as Beijing’s latest stimulus measures disappointed investors, while fresh data showed the country’s post-pandemic recovery was slowing.
Volume on US exchanges was 10.19 billion shares, compared to the 10.93 billion average for the full session over the past 20 trading days.
S&P 500 posted 4 new 52-week highs and 3 new lows; The Nasdaq Composite recorded 52 new highs and 169 new lows.
Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru and David French in New York; Additional reporting by Shashwat Chauhan; Editing by Vinay Dwivedi and David Gregorio
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