NEW YORK CITY, RAW – The S&P 500 and the Nasdaq have slipped in choppy trading as jittery investors looked to remarks from Federal Reserve Chair Jerome Powell on rising bond yields while data points to a staggering recovery in the labour market.
The number of people in the US filing for jobless benefits rose last week, likely boosted by brutal winter storms in the densely populated south of the country, though the labour market outlook is improving amid declining new COVID-19 cases.
The crucial monthly payrolls report is expected on Friday.
Wall Street’s main indexes fell in the past two sessions as a spike in US bond yields pressured high-flying tech stocks while economy-linked stocks outperformed on hopes of a new round of fiscal aid and vaccinations.
The energy sector enjoyed a 1.0 per cent jump on the back of higher oil prices.
Apple Inc, Tesla Inc and PayPal Holdings Inc were among the top drags on the S&P 500.
Powell is set to speak at a Wall Street Journal conference later on Thursday where his comments will be scrutinised for any hints of concern about last week’s jump in bond yields, in what will be his last outing before the Fed’s March 16-17 policy meeting.
“Fed Chairman Jerome Powell has downplayed inflation worries and continues advocating dovish monetary policy but those yields suggest investors aren’t completely convinced,” said JJ Kinahan, chief market strategist at TD Ameritrade.
Ahead of Powell’s remarks, the 10-year Treasury yields were at 1.467 per cent but they held below last week’s one-year high of 1.614 per cent.
Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when bond returns go up.
In early trading, the Dow Jones Industrial Average rose 57.06 points, or 0.18 per cent, to 31,327.15, the S&P 500 lost 5.80 points, or 0.15 per cent, to 3,813.92 and the Nasdaq Composite lost 106.99 points, or 0.82 per cent, to 12,890.76.
The S&P 500 traded below its 50-day moving average, an indicator of short-term momentum, while the Nasdaq trimmed its year-to-date gains to 0.1 per cent.
In contrast, the Dow has risen 2.5 per cent in 2021 and the S&P 500 is up about 1.5 per cent in the same period.
The US Senate is expected to begin debating President Joe Biden’s $US1.9 trillion ($A2.4 trillion ) coronavirus relief package on Thursday after agreeing to phase out payments to higher-income earners in a compromise with moderate Democratic senators.
Boeing Co rose about 1.0 per cent as the US and the UK agreed a four-month suspension of US retaliatory tariffs in a long-running row over aircraft subsidies to allow negotiations to take place.
Disney’s shares dropped 1.0 per cent as it announced it will close at least 60 Disney retail stores in North America this year and about 20 per cent of its worldwide total as it revamps its digital shopping platforms to focus on e-commerce.
Declining issues outnumbered advancers by a 1.3-to-1 ratio on the NYSE and by a 2.7-to-1 ratio on the Nasdaq.
The S&P 500 posted 17 new 52-week highs and no new low while the Nasdaq recorded 106 new highs and 140 new lows.