By Ambar Warrick and Devik Jain
(Reuters) – Major Wall Street indices tumbled on Tuesday as the Nasdaq suffered the worst performance as rising yields on US Treasuries weighed heavily on stocks of big tech companies, while gains in US bonds banking and energy sectors helped to limit broader market losses.
The S&P 500 index for the energy sector jumped 2.7%, in the wake of the rally in oil prices, after a move by the United States and other consuming nations to release oil from their reserves to try to cool the market, falling short of some expectations.
The bank sub-index rose 1.3%, extending Monday’s gains. Goldman Sachs, JPMorgan and Bank of America advanced more than 1% each as investors strengthened expectations of interest rate hikes next year after Jerome Powell was named for a second term as Fed chair.
S&P’s technology sector, however, was down 0.9% as rising Treasuries yields undermined the appeal of the sector, which is considered high-growth and heavily reliant on long-term financing.
“It is possible that interest rates will rise sooner than expected,” said Rick Meckler, a partner at Cherry Lane Investments.
“But this result, while positive for bank stocks, is not positive for the rest of the stock market, especially technology, which trades at very high price/earnings multiples.”
The CBOE volatility index rose briefly to a peak in more than a month earlier this Tuesday. With the expectation that the Thanksgiving holiday will keep volumes low this week, markets could experience high volatility.
An IHS Markit survey showed that US business activity slowed moderately in November amid labor shortages and delays in raw material delivery, but remained comfortably in expansion territory on the strength of the manufacturing sector.
At 1:28 pm (Eastern time), the Dow Jones index was up 0.18%, to 35,682 points, while the S&P 500 lost 0.337395%, to 4,667 points. The Nasdaq technology index retreated 1.14% to 15,674 points.
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