The rapid rise in bond yields sparked a sell-off in the US tech sector on Thursday. Higher interest rates make this particularly high in some cases …
NEW YORK (dpa-AFX) – The rapid rise in yields on the bond market triggered a sell-off in the US technology sector on Thursday. Higher interest rates are causing problems for these shares, some of which are very highly valued, because they increase the financing costs of the strongly growth-oriented tech companies. In general, alternatives to equity investments could become more attractive if the current yield trend continues.
The technology-heavy NASDAQ 100 dropped 3.13 percent to 12,789.14 points. The Nasdaq Composite (NASDAQ Composite Index), which includes a large number of stocks, fell by 3.02 percent.
The market-wide S&P 500, which contains many tech values, lost 1.48 percent to 3915.46 points. The leading index Dow Jones Industrial (Dow Jones 30 Industrial) had made the leap to a record high in the course of trading before turning slightly into the red. In the end, there was a loss of 0.46 percent to 32,862.30 points. His new record is now just under 33,228 points.
The futures contract for ten-year Treasuries (T-Note-Future) recently fell 0.43 percent to 131.38 points. In return, the yield on ten-year government bonds rose to 1.71 percent.
For some time now, bond yields have benefited from the trillion dollar economic stimulus from the US government and the progress made in the vaccination campaign against the coronavirus. On Wednesday, the US Federal Reserve (Fed) continued to react calmly to developments on the bond market. The current very loose monetary policy is still considered appropriate.
The rising bond yields meanwhile raised hopes for better interest rate deals from banks. Goldman Sachs shares rose 0.9 percent and JPMorgan (JPMorgan ChaseCo) 1.7 percent in the Dow. The shares of both finance houses had reached highs in the course of trading.
The experts at the Swiss bank Credit Suisse pointed out that more members of the Fed’s monetary policy committee now expect an interest rate hike as early as 2022. The number of those who expect an increase in 2023 has also grown. The Credit Suisse experts expect bond yields to continue to rise as the market adapts to the new signals.
Oil company stocks suffered from the collapse in oil prices. Chevron’s papers, for example, buckled 3.6 percent at the Dow end. The shareholders of Exxon Mobil (ExxonMobil) suffered losses of 4.3 percent.
Traders justified the drop in oil prices with the increased exchange rate of the US dollar. Crude oil is traded in dollars. A higher dollar rate makes crude oil more expensive for investors from other currency areas. In addition, reference was made to the sluggish corona vaccinations in some parts of the world.
In the S&P 500, Dollar General’s shares fell 4.7 percent. The department store chain had disappointed analysts’ expectations with its sales and earnings forecasts. In addition, earnings per share were surprisingly low in the fourth quarter.
The euro fell to $ 1.1913 after the New York market closed. The rapid rise in yields is attracting more capital to the US, which gives the dollar a boost and in turn weakens the euro. The European Central Bank had set the reference rate at 1.1912 (Wednesday: 1.1907) dollars. The dollar cost 0.8395 (0.8398) euros./la/fba
— By Lutz Alexander, dpa-AFX —
– .
