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US STOCKS-Wall Street ends sharply lower, tech selloff weighs as bond yields climb

Published 02/26/2021, 05:40 AM
Updated 02/26/2021, 05:50 AM
© Reuters.

© Reuters.

* U.S. 10-year Treasury yield rises above S&P 500 div yield
* Nasdaq posts largest daily fall since late October
* Weekly jobless claims decline

(New throughout, adds details, milestones and volume)
By Gertrude Chavez-Dreyfuss
NEW YORK, Feb 25 (Reuters) - Wall Street's main indexes
tumbled on Thursday, with the Nasdaq index posting its largest
daily percentage fall in four months, as technology-related
stocks remained under pressure following a rise in U.S. bond
yields.
The Dow and the S&P 500 notched their biggest daily decline
since late January.
The benchmark 10-year Treasury yields US10YT=RR hit a
one-year high of 1.614%, prompting investors concerned about
rich valuations to lock in profits on some high-flying growth
stocks. US/
The Treasury note yield rose above S&P 500 dividend yield,
wiping out the stock market yield's strong advantage.
"Rates matter. At 1.5%, the yield is comparable to S&P 500
dividend yield," said Peter Tuz, president of Chase Investment
Counsel in Charlottesville, Virginia. "And there's no capital
risk with a 10-year, you'll get your principal back. All of a
sudden it's competitive with stocks,"
Apple Inc AAPL.O , Amazon.com Inc AMZN.O , Microsoft Corp
MSFT.O , Alphabet Inc GOOGL.O , Facebook Inc FB.O and
Netflix Inc NFLX.O dropped between 1.2% to 3.6%.
Despite the broad market slide, GameStop Corp GME.N shares
surged again, leading a surprise resurgence of so-called
"stonks" championed online by retail investors. doubling in the previous session, GameStop was almost 90%
higher at its session peak but pared gains to close up 18.6%.
The Dow Jones Industrial Average .DJI closed 559.85 points
lower, or 1.75%, to 31,402.01, the S&P 500 .SPX lost 96.09
points, or 2.45%, to 3,829.34 and the Nasdaq Composite .IXIC
dropped 478.54 points, or 3.52%, to 13,119.43.
The S&P 500 technology sector .SPLRCT fell 3.5%, as did
communication services .SPLRCL , which slid 2.6%, among the
sectors that powered the market's rally in 2020.
The S&P 500 growth index .IGX is nearly unchanged in
February, sharply underperforming the value index .IVX , which
has gained more than 7% on optimism related to a post-pandemic
reopening of the economy.
"You've had an equity market that's hit record highs many
times this year and it's expensive relative to historic norms,"
said Chase's Tuz. "We were primed for a sell-off."
Meanwhile, data showed fewer Americans filed new claims for
unemployment benefits last week as COVID-19 infections fell, but
the near-term outlook remained unclear after winter storms
wreaked havoc in the South this month.
Optimism about more U.S. stimulus and a quicker pace of
vaccinations at the beginning of the month have positioned the
Dow Jones .DJI index for its best monthly gain since November.
"In the beginning of February, the stimulus news was the
driving force but now that it has been priced in, there is
nothing on the distant horizon for equity investors to be
excited about and there is a concern that upside is limited,"
said Mike Zigmont, head of trading and research at Harvest
Volatility Management.
Tesla Inc TSLA.O fell 8.1% after a media report that the
electric-car maker told workers it would temporarily halt some
production at its California assembly plant. Moderna Inc MRNA.O jumped 2.5% after the drugmaker said it
was expecting $18.4 billion in sales from its COVID-19 vaccine
this year. Declining issues outnumbered advancing ones on the NYSE by a
6.71-to-1 ratio; on Nasdaq, a 7.36-to-1 ratio favored decliners.
The S&P 500 posted 71 new 52-week highs and no new lows; the
Nasdaq Composite recorded 202 new highs and 39 new lows.
Volume on U.S. exchanges was 15.84 billion shares, compared
with the 15.61 billion average for the full session over the
last 20 trading days.

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