Market

U.S. stocks mostly lower as tech sector sees renewed pressure

U.S. technology stocks were lower Tuesday as Treasury yields extended a rise, dragging down major stock indexes. Energy shares rallied, however, as crude bounced even though the White House announceed the U.S. would release crude from its Strategic Petroleum Reserve in a coordinated move with other countries in an effort to lower gasoline prices.

How are stocks trading?

On Monday, the Dow Jones Industrial Average 
DJIA,
+0.01%

rose less than 0.1% to end at 35,619.25. The S&P 500
SPX,
-0.44%

fell 0.3% after hitting an intraday all-time high at 4,743.83 earlier in the session. The Nasdaq Composite Index 
COMP,
-1.36%

fell 1.3% to 15,854.76 for its biggest decline since Nov. 10.

What’s driving the market?

Tech stocks attempted an early rebound, but were unable to maintain upside momentum, after a slide in the previous session. Monday’s late-day weakness for Wall Street was tied by some analysts to expectations that Federal Reserve Chairman Jerome Powell — nominated to a second term by President Joe Biden — could tighten monetary policy faster than Lael Brainard, who was appointed Vice Chair but had also been in the running for the top job.

Read: What a Fed led by Powell and Brainard means for Americans’ bank accounts

“Ultimately I don’t see how the Powell-led Fed is more hawkish today than it was last week, but we should always beware linear thinking: even the Fed can adapt and learn from the persistently high inflation,” said Neil Wilson, chief market analyst for Markets.com, in a note to clients.

“You never know, perhaps the Fed — and the White House — are starting to heed some warnings about what untethered inflation can do. In summary, you could say there has been a whiff of a hawkish tilt at the Fed in recent weeks and the administration is OK with that,” said Wilson.

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.651%

rose 1.8 basis points to 1.648%, after yields across the board rose at the fastest daily rate in nearly two weeks on Monday.

Investors are also watching yet another resurgence of new coronavirus cases in Europe and Asia in particular which have prompted another round of restrictions on businesses and consumers to try to limit infections.

Trading was expected thin out as Thursday’s U.S. Thanksgiving Day holiday nears.

In economic data, a pair of surveys by IHS Markit showed U.S. businesses grew rapidly in November, but they are still being hampered by ongoing labor and supply shortages that are feeding the biggest burst of inflation in 31 years and constraining an economic recovery. The so-called flash survey of U.S. manufacturers rose to a two-month high of 59.1 in November from 58.4 in the prior month. A similar flash survey of service-oriented companies slid to a two-month low of 57 from 58.7. Any number above 50 signals expansion and figures above 55 are seen as exceptional.

U.S. markets will close Thursday and open a half-day on Friday in observance of the Thanksgiving Day.

Across other markets, oil futures erased losses to turn higher after the White House announced a plan to release 50 million barrels of oil from the U.S. Strategic Petroleum Reserve, or SPR, in coordination with other countries. West Texas Intermediate crude
CL00,
+2.62%
,
the U.S. benchmark, was up 2% at $78.27 a barrel. Brent crude
BRN00,
+3.34%
,
the global benchmark, rose 2.6% to $81.80 a barrel. Crude futures had dropped to a seven-week low on Friday, pressured in part by building expectations for a release of crude from reserves.

Energy was the the S&P 500’s best-performing sector, up 2.2%.

What companies are in focus?
  • Shares of Zoom Video Communications
    ZM,
    -17.19%

    fell nearly 18% after company executives detailed falling revenue on a conference call late Monday. That was after the company posted a forecast beating outlook, revenue and earnings.

  • Best Buy
    BBY,
    -13.15%

    shares tumbled 16% after the electronics retailer forecast holiday season comparable sales below expectations, though it reported a quarterly beat on the top and bottom lines, however, with a profit of $2.08 per share coming in 17 cents a share above estimates.

  • Abercrombie & Fitch
    ANF,
    -14.73%

    shares dropped 17.3%. The retailer’s results beat forecasts as Chief Executive Fran Horowitz spoke of “ongoing supply chain constraints,” delivery delays and higher costs.

  • Shares of XPeng Inc.
    XPEV,
    +5.57%

    rallied 7.1% after the China-based electric vehicle maker reported a wider-than-expected third-quarter loss, but revenue above forecasts and delivered an upbeat fourth-quarter outlook

  • Dollar Tree
    DLTR,
    +7.31%

    shares rose more than 6% after the retailer matched profit forecasts and topped expectations for sales, but saw falling gross margin and said it was moving to a $1.25 price point for all its stores.

How are other assets trading?
  • The ICE U.S. Dollar Index
    DXY,
    -0.06%
    ,
     a measure of the currency against a basket of six major rivals, was down 0.1%.

  • The Stoxx Europe 600 
    SXXP,
    -1.28%

    fell 1.1%, while London’s FTSE 100 index
    UKX,
    +0.15%

    was up 0.3%.

  • In Asia, the Shanghai Composite 
    SHCOMP,
    +0.20%

     finished up 0.1%, while the Hang Seng Index 
    HSI,
    -1.20%

     fell 1.2% in Hong Kong. China’s CSI 300
    000300,
    +0.02%

    was flat and Japan’s Nikkei 225 
    NIK,
    +0.09%

    was closed for a holiday.

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