Stocks were falling Wednesday after Treasury yields spiked and a report showed the U.S. private sector added jobs in February at a weaker-than-expected pace.
The Dow Jones Industrial Average fell 32 points, or 0.1%, to 31,358, the S&P 500 fell 1.09% and the tech-heavy Nasdaq was down 2.68%.
Big tech stocks like Alphabet (GOOGL) – Get Report, Amazon.com AMZN and Microsoft (MSFT) – Get Report tumbled.
Fears of higher interest rates remain front and center for investors, who recently have been questioning how much they’re willing to pay for equities, particularly high-flying tech stocks.
Benchmark Treasury yields rose Wednesday to as high as 1.498%. They jumped last week to one-year highs, spurred by concerns that inflation would rise as the economy recovered from the coronavirus pandemic.
“We believe inflation will be more of a concern to markets in the near term, but not as much over the long-term,” said Rod von Lipsey, managing director of UBS Private Wealth Management. “Year-over-year comparisons in headline inflation data will show a sharp increase over the coming months, which may spook markets, but we expect those elevated numbers to be short-lived and decline back near the Fed’s expectations of inflation by the end of the year.
He said he still expects the 10-year Treasury yield to be under 2% by the end of the year.
The yield gains have put the difference, or spread, between two-year and 10-year notes at around 134 basis points, the widest since early 2017 and a classic market signal for economic growth and faster inflation, a likely outcome from the planned $1.9 trillion stimulus bill that passed through the Democratic-controlled House last week.
The ADP National Employment Report showed jobs in the private sector rose by 117,000 last month, down from a revised 195,000 in January and below estimates that called for a gain of 225,000.
“The labor market continues to post a sluggish recovery across the board,” said Nela Richardson, ADP’s chief economist.
The Federal Reserve said in its “Beige Book” Wednesday that the U.S. economy expanded modestly in the first two months of the year but progress on vaccinating Americans against COVID-19 was boosting sentiment.
President Joe Biden pledged that the U.S. would have enough vaccine supply to inoculate every American by the end of May.
Biden invoked the Defense Protection Act to compel Merck (MRK) – Get Report to assist Johnson & Johnson (JNJ) – Get Report with its newly approved one-shot COVID-19 vaccine.
With the U.S. administering about 1.8 million vaccine doses each day, and new cases falling 20% from previous weeks to around 50,000 per day, investors have begun betting on a reopening of the broader economy in late spring.
Lyft (LYFT) – Get Report was rising Wednesday after the ride-sharing company said ridership in the last week of February was its best week in nearly a year.
“Lyft is…
Read More: Tech Leads Wall Street Lower as Bond Yields Jump, Nasdaq Tanks