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Wall Street ended lower on Monday, led by a decline in rate-sensitive growth stocks. Investors remained apprehensive about the economy slowing down as a fallout of the Fed’s plans to rapidly hike interest rates. The 10-year Treasury yield reached its highest level in more than three years. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 1.2% or 413.04 points to close at 34,308.08. Twenty-six components of the 30-stock index ended in red, one remained unchanged, while three closed in the green.
The tech-heavy Nasdaq Composite dropped 2.2% or 299.04 points to finish at 13,411.96 as tech stocks and tech-adjacent stocks declined.
The S&P 500 dipped 1.7% or 75.75 points to end at 4,412.53. All the 11 broad sectors of the benchmark index closed in red.
The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Health Care Select Sector SPDR (XLV) dropped 3%, 2.5% and 2%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 15.17% to 24.37. A total of 11.03 billion shares were traded on Monday, lower than the last 20-session average of 12.71 billion. Decliners outnumbered advancers on the NYSE by a 2.64-to-1 ratio. On Nasdaq, a 2.08-to-1 ratio favored declining issues.
Growth Stocks Decline
The holiday-shortened week started with investors seeming to go risk-free. Investors are worried about how the Fed plans to increase interest rates in its next policy meeting. Also, there have been concerns that Fed’s policy move could lead to a major slowdown of the economy, sending it into a recession. Concerns about rising inflation are denting investors’ confidence as they wait for the key consumer-price index data due to be released on Tuesday that will reflect the annual headline inflation figure.
Energy and healthcare stocks took a beating on Monday as investors deemed them riskier in the wake of imminent interest rate hikes. Tech and tech-adjacent stocks, which have been suffering from the beginning of this year, suffered once again on Monday as investors kept rushing out of the sector on a safety-first trading day.
On Monday, the 10-year Treasury yield rose 6.6 basis points to close at 2.78%, its highest level since January 2019, putting the benchmark rate well above the 2-year bond. The 2-year bond was recently hovering above the 10-year bond, triggering a yield curve inversion, which is often seen as a precursor of recession. Yields move in inverse relation to prices. Higher yields from risk-free treasury bonds indicate future flows are not profitable in the current valuation.
Ukraine Development Influences Investors
Ukraine said on Monday that it expects Russia to begin an offensive in the eastern Donbas region, despite the ongoing peace negotiations. With oil and commodity prices, and supply-chain logistics being affected directly by the growing tensions in the region, investors took a flight to safety in trading throughout the day.
No economic data was released on Monday.
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Stock Market News for Apr 12, 2022
Wall Street ended lower on Monday, led by a decline in rate-sensitive growth stocks. Investors remained apprehensive about the economy slowing down as a fallout of the Fed’s plans to rapidly hike interest rates. The 10-year Treasury yield reached its highest level in more than three years. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 1.2% or 413.04 points to close at 34,308.08. Twenty-six components of the 30-stock index ended in red, one remained unchanged, while three closed in the green.
The tech-heavy Nasdaq Composite dropped 2.2% or 299.04 points to finish at 13,411.96 as tech stocks and tech-adjacent stocks declined.
The S&P 500 dipped 1.7% or 75.75 points to end at 4,412.53. All the 11 broad sectors of the benchmark index closed in red.
The Energy Select Sector SPDR (XLE), the Technology Select Sector SPDR (XLK) and the Health Care Select Sector SPDR (XLV) dropped 3%, 2.5% and 2%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was up 15.17% to 24.37. A total of 11.03 billion shares were traded on Monday, lower than the last 20-session average of 12.71 billion. Decliners outnumbered advancers on the NYSE by a 2.64-to-1 ratio. On Nasdaq, a 2.08-to-1 ratio favored declining issues.
Growth Stocks Decline
The holiday-shortened week started with investors seeming to go risk-free. Investors are worried about how the Fed plans to increase interest rates in its next policy meeting. Also, there have been concerns that Fed’s policy move could lead to a major slowdown of the economy, sending it into a recession. Concerns about rising inflation are denting investors’ confidence as they wait for the key consumer-price index data due to be released on Tuesday that will reflect the annual headline inflation figure.
Energy and healthcare stocks took a beating on Monday as investors deemed them riskier in the wake of imminent interest rate hikes. Tech and tech-adjacent stocks, which have been suffering from the beginning of this year, suffered once again on Monday as investors kept rushing out of the sector on a safety-first trading day.
Shares of Cisco Systems, Inc. (CSCO - Free Report) and American Express Company (AXP - Free Report) declined 2.6% and 3.3%, respectively. Cisco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The 10-Year Treasury Yield at 3-Year-High
On Monday, the 10-year Treasury yield rose 6.6 basis points to close at 2.78%, its highest level since January 2019, putting the benchmark rate well above the 2-year bond. The 2-year bond was recently hovering above the 10-year bond, triggering a yield curve inversion, which is often seen as a precursor of recession. Yields move in inverse relation to prices. Higher yields from risk-free treasury bonds indicate future flows are not profitable in the current valuation.
Ukraine Development Influences Investors
Ukraine said on Monday that it expects Russia to begin an offensive in the eastern Donbas region, despite the ongoing peace negotiations. With oil and commodity prices, and supply-chain logistics being affected directly by the growing tensions in the region, investors took a flight to safety in trading throughout the day.
No economic data was released on Monday.