Tech sell-off drags stocks lower, pulling market below highs

Business

A sell-off in technology companies dragged stocks lower on Wall Street in afternoon trading Monday, pulling the market back from its recent all-time highs.

The S&P 500 was down 0.7% as of 3:36 p.m. Eastern after wobbling between small gains and losses. The Nasdaq was down 2.2%, its worst day in more than seven weeks, as Big Tech companies that dominate the index like Apple, Google, Facebook and Amazon fell. The Dow Jones Industrial Average bucked the trend, but was losing momentum in the final hour of regular trading. The blue chip index was up 95 points, or 0.3%, to 34,875.

Markets are still reacting to Friday’s U.S. jobs report. The market’s most anticipated economic report of each month, the data showed employers added just 266,000 jobs in April, far fewer than the 975,000 economists were expecting. It was a steep drop from March’s hiring pace of 770,000.

The weak jobs number suggests the economy is still in recovery mode and bolsters the case for the Federal Reserve to keep interest rates low.

But keeping interest rates low means the potential for more inflation down the road. Commodity prices spiked in early trading before settling down. Copper rose 5% in the early going before reversing to a loss of 0.7%. Platinum, which has several industrial uses, rose 0.1%. Investors will get some key inflation data this week, especially on Wednesday when April’s consumer price index is released.

Inflation has been a concern for investors since bond yields spiked earlier this year, but yields have mostly stabilized since then. The yield on the 10-year Treasury rose to 1.61% from 1.57% late Friday.

Rising commodity prices are also starting to make a variety of everyday products more expensive. Analysts expect any increases in these measures going forward to be more mild and tied to the growing economy.

“This is more an effect of short-term confidence, not a long-term issue that we’re worried about,” said Andrea Bevis, senior vice president at UBS Private Wealth Management. “What matters most is what most prices are doing and we don’t foresee a big move further.”

Though the employment market has been lagging the recovery, other measures show that the economy is pushing forward. Consumer confidence and retail sales have both been regaining ground as people get vaccinated and businesses reopen. Americans set a record for pandemic-era air travel on Sunday, according to The Transportation Security Administration.

Meanwhile, the most recent round of corporate earnings reports showed a broad recovery touching many different sectors and industries during the the first three months of the year. Much of that was anticipated ahead of the reports and investors are now far off from the next big round of results.

“I’m not surprised to see the market take a little bit of a pause,” Bevis said.

Wholesale gasoline prices rose 0.3% after a cyberattack that shut down a U.S. pipeline that carries fuel from the Gulf Coast to the Northeast. The operator of the pipeline said it hopes to have service mostly restored by the end of the week.

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