The New York Stock Exchange traded in loose order on Monday at the start of a week full of indicators on continued expansion, but also inflation, as bond rates rose to their highest in three months.
At 14:10 GMT, the Dow Jones index advanced 0.66% while the Nasdaq, where technology stocks are concentrated, lost 1.04%. The S&P 500 dropped 0.24%.
On Friday, the indices ended on a mixed note after a week shaken by concerns about the solvency of Chinese real estate giant Evergrande.
The Dow Jones closed slightly up 0.10% at 34,798 points, the technology-intensive Nasdaq index lost 0.03% to 15,047.69 points and the broader S&P 500 index gained 0.15% to 4,455.48 points.
“We have a mixed opening with the Nasdaq and the S&P under pressure from the tech sector. The reason is that bond yields have skyrocketed this morning,” said Peter Cardillo of Spartan Capital Securities.
10-year Treasury bill rates climbed to 1.51%, just after much stronger than expected durable goods orders were posted in August in the United States (+ 1.8% vs. + 0.6% expected).
This is the highest level of yields since the end of June.
“There are many signs that the economy is doing better, which explains the rise in yields,” said the analyst.
“Durable goods orders came out very strong, one more reason to believe that bond yields should continue to rise,” he said.
The tech sector was drinking the cup, as problems mount in the semiconductor supply. Apple lost 1.69% to $ 144.39.
“Press reports report that some suppliers of Apple, Tesla and many semiconductor manufacturers are forced to stop production this week due to a decree in China aimed at saving electricity,” noted Patrick O’Hare from Briefing.com
Difficulties and bottlenecks in the production chain are one of the factors of inflation. Investors will be watching for the publication on Friday of the PCE index, the Fed’s favorite barometer for measuring prices.
“The disruption of supply chains (…) add to the anxiety of inflation,” said Patrick O’hare.
“It promises a bumpy road for rates this week,” added Peter Cardillo, while Treasury bills, whose rates rise in reverse of their price, appear to be safe havens to protect against inflation.
Facebook dropped 1.19% to 348.73 dollars as the social media giant announced on Monday that it was pausing the development of a version of Instagram for children under 13, after criticism in the name of mental health children.
Six of the eleven sectors of the S&P remained in the green, led by sharply rising shares (+ 3.34%) in the energy sector. Oil prices rose more than 2% to a three-year high. The UK was experiencing gasoline shortages amid panic buying.
Industrial stocks (+ 0.66%) and bank stocks (+ 1.43%) pulled the Dow Jones up while information technology stocks (-1.33%), sensitive to inflation, weighed down the Nasdaq.