Wall Street slumps as technology continues to underperfom
|- Unemployment in the U.S. falls to its lowest level since 1969.
- Rising T-bond yields weigh on stocks.
- Intel and Microsoft suffer heavy losses, drag Nasdaq lower.
Despite the upbeat employment figures, major equity indexes in the United States started the day in the red and failed to make a meaningful recovery.
After the U.S. Bureau of Labor Statistics today reported that the unemployment rate fell to its lowest level in nearly 50 years at 3.7% with a 134,000 increase in nonfarm payrolls, the 10-year T-bond yield advanced to its highest level in 7 years at 3.248%. "Good news for economy is bad news for equity investors right now. The labor report on the surface looked a bit weak but once you got under the surface it kind of supported the story of a strong labor market," Michael Geraghty, equity strategist at Cornerstone Capital Group's in New York, told Reuters to explain the market reaction.
Dragged by heavy losses witnessed in Intel and Microsoft shares, the S&P 500 Technology Index closed the day 1.27% lower to record the biggest daily percentage loss among the 11 major sectors. The S&P 500 Communication Services Index, meanwhile, fell 1.04% as social media giants such as Twitter and Facebook finished the day with lower.
The only major sector that closed in the positive territory was the so-called defensive S&P 500 Utilities Index, which added 1.57%. Although the rate-sensitive the S&P 500 Financials Index gained traction on rising bond yields earlier this, it struggled to preserve its momentum and erased 0.4% on the day.
At the end of the day, the Dow Jones Industrial Average was down 177.92 points, or 0.67%, at 26,449.56. The S&P 500 dropped 16.62 points, or 0.57%, to 2,884.99 and the Nasdaq Composite fell 93.60 points, or 1.19%, to 7,785.91.
For the week, these three major indexes lost 0.04%, 0.98%, and 3.2%, which is the Nasdaq's biggest weekly percentage fall in nearly 7 months, respectively.
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