S&P 500 on track for third week of declines, led by Tech

Contracts linked to the tech-heavy Nasdaq-100 were relatively flat, suggesting the sector may be struggling to get its foot in the door again.

Stocks have stumbled over the past few weeks as a rise in bond yields has raised the question of whether low interest rates, which have driven valuations higher over the past year, could last much longer. Yields, which rise as bond prices fall, have risen in response to expectations of a faster pace of growth and inflation as the economy reopens from the coronavirus pandemic.

The yield on ten-year treasury notes was roughly equal to 1.549% on Friday, compared to 1.547% on Thursday. This was the highest level of standard borrowing costs since February last year. The recent rise in yields came after Federal Reserve Chairman Jerome Powell gave no sign that the central bank would try to stem the increase when he spoke at The Wall Street Journal Jobs Summit.

‘It’s all about the effects of the bond yield. It’s all about Jerome Powell, “said Edward Park, chief investment officer at Brooks Macdonald. ‘There is currently a lot of uncertainty in the market as to whether inflation is generally expected in the short term. of a transient nature or that it is more sustained. ”

Yields on bonds are likely to continue to rise and equities could remain volatile unless the Fed takes concrete steps to curb yields, he said. Park. “The markets are at their most volatile when they are not sure how monetary policy and fiscal policy will react.”

Technology stocks have borne the brunt of the shift in sentiment over the past few weeks. The Nasdaq Composite Index, a fine-tuned barometer for the sector, fell to its lowest level since January 4 on Thursday. The index dropped the day by 9.7% from its high on February 12, which only shortens the correction area.

Before the clock in New York, Gap shares rose nearly 5%. Managers at the firm on Thursday predicted that clothing sales would recover in the second half of the year after a difficult 2020.

Broadcom shares fell nearly 2% in trading after the market after the company’s record sales came just below Wall Street’s estimates. Shares of energy companies, including Exxon Mobil and Occidental Petroleum, were boosted by rising oil prices following an unexpected decision by OPEC and its partners to carry out the April production cuts.

Investors will later analyze the February work report, which will be released at 8:30 p.m. ET. It is expected to show that the economy created 210,000 jobs last month. This would contribute to signs of a slow improvement in the labor market, after data on Thursday showed that the filing of unemployment benefits had reached its lowest level in three months.

The job report is unlikely to yield much revenue because the data is unlikely to affect progress with the Senate’s Biden administration stimulus package, said Rabobank senior tariff strategist Lyn Graham-Taylor. The Senate on Thursday proposed the $ 1.9 billion bill after making a series of amendments, and is expected to approve it within days.

According to Mr. Graham-Taylor is likely to keep returns higher. “So far, the Fed has stressed that he does not like it, but it’s pretty comfortable with it,” he said. “In the back of their minds, it’s natural that yields are rising a bit: we are not like the storm in the eye.”

The oil price rose for a second day after OPEC and a coalition of oil producers led by Russia kept most of their production cuts and surprised the market. Brent crude, the benchmark in international energy markets, rose 2.7% to $ 68.52 a barrel.

Overseas, the pan-continental Stoxx Europe 600 declined by 0.2%. Among the individual stocks in the region, the London Stock Exchange Group fell by 8.8% after gains in the second half were less than analysts’ forecasts and costs were above expectations.

The largest Asian indices closed the day. The Japanese Nikkei 225 fell 0.2% lower, while Hong Kong’s Hang Seng index fell nearly 0.5%.

Write to Joe Wallace by Joe.Wallace@wsj.com