U.S. stocks fall, led by slump in tech companies

Technology companies led a broad slide in Wall Street stocks as investors look to the next season of earnings reporting for the company and what it will reveal about impact on inflation has corporate benefits.

The S&P 500 fell 1.7%, adding to its recent losses. The Dow Jones Industrial Average fell 1.2% and the Nasdaq, with a lot of technology, fell 2.2%. Both the benchmark S&P 500 and the Nasdaq are coming out of their first weekly losses in four weeks.

Bond yields rose. The 10-year Treasury yield rose to 2.78% from 2.71% on Friday afternoon. Bonds have been rising amid expectations of higher interest rates as the Federal Reserve moves to curb inflation.

The market “is still reacting to what is happening in the bond market,” said Willie Delwiche, All Star Charts investment strategist. “You have yields, not just in the United States, but around the world, that are going up a lot and that’s putting pressure on (stocks) in general. That was the story last week, and it’s the story this week.”

Higher rates hurt all kinds of investments, especially the stocks that are considered the most expensive, such as those of large technology companies. Because bonds offer better returns for less risk, this makes expensive stocks less attractive, which is why heavier sales have focused on technology and other growth stocks, as fears of inflation have shaken the market.

Technology stocks were once again the most important weights on the market on Monday. Microsoft fell 3.9% and Apple 2.6%.

All 11 sectors of the S&P 500 fell. The index ended with a drop of 75.75 points to 4,412.53. The Dow lost 413.04 points to 34,308, while the Nasdaq fell 299 points to 13,412.

Small business stocks held up better than the rest of the market. The Russell 2000 fell 14 points, or 0.7%, to 1980.

Energy stocks were some of the biggest losers, as oil prices continued to fall. US crude oil prices fell 4% and Occidental Petroleum fell 3.9%, the biggest drop in the S&P 500.

Oil prices remain volatile in the middle The Russian invasion of Ukraine, which has put more pressure on global energy supplies. World oil prices rose slightly more than 25% during the year, although they fell slightly in April.

Twitter focused later Tesla CEO Elon Musk said he would not join the company’s board after all. Shares rose 1.7%. Musk recently became the company’s largest individual shareholder and is now free to increase its stake.

Investors continue to worry about higher interest rates, Russia’s war against Ukraine and China’s effort to contain coronavirus outbreaks. In China, carmakers and other manufacturers are slashing production after authorities tighten restrictions to help curb coronavirus outbreaks in Shanghai and other cities.

Wall Street will receive several updates this week that could provide more clues as to how the overall economy has been managed rising inflation.

Investors expect the impact of inflation on the company’s profits

The Labor Department will release its March consumer price report on Tuesday, while the Commerce Department will release its March retail sales report on Thursday. These reports have been closely watched as investors try to figure out how rising prices have been affecting consumer spending. Any significant slowdown in consumer spending would likely mean a more pronounced slowdown in economic growth than expected this year.

The latest economic updates come as investors anticipate a more aggressive change in the Federal Reserve as it tries to moderate the impact of rising inflation. The central bank has already announced a quarter-percentage point increase in its key interest rate.

Fed officials said in minutes of last month’s meeting that they were considering raising the U.S. benchmark rate by twice the normal amount at upcoming meetings. They also indicated that they would reduce Fed bond holdings, which would increase long-term debt rates.

Wall Street will also begin to learn more about the performance of individual businesses during the first quarter and what they expect to do next.

“Investors will look to see how inflation is affecting corporate earnings,” Delwiche said. “Can companies pass on higher costs to consumers or should costs be eaten up?”

Delta Air Lines and JPMorgan Chase will report on their latest financial results on Wednesday, while UnitedHealth Group, Wells Fargo and Citigroup will present their results on Thursday.