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Technology stocks continued their downtrend on Friday, driving down major US equity indices and putting the high-tech Nasdaq Composite on its worst week since early spring.
Investors sold stocks of the best-performing companies of the year, by turning away from the best performing sectors, such as high-tech companies and consumer companies, to buy so-called so-called security shares, such as public services.
This rotation led to a 1.6% drop in Nasdaq Composite, a player at the cutting edge of technology. For the week, the index is down 3.7%, posting its worst performance since the week ended March 23. The Dow Jones Industrial Average lost 245 points, or 0.9%, to 26,382, while the S & P 500 lost 0.8%.
"The technology is definitely back this week, but given the strong earnings, it's only a retreat after ramping up earlier this year, not a reversal," he said. said Jeff James, portfolio manager at Driehaus Capital Management, who added: had reduced his exposure to the technology recently.
Shares of the S & P 500 technology companies, which had the best performance in 2018 as investors dampened growth, fell 1.6%.
Friday's sales continued the sharp declines on Thursday. One of the reasons for the fall: the recent plunge in US government bonds, caused by a crescendo of positive news on the US economy and the easing of trade tensions. The recent sale of the bond market has propelled Treasury yields to multi-year highs.
The yield on the 10-year US Treasury note reached 3.238%, the highest level in more than seven years, compared to 3.196% on Thursday. Yields evolve in the opposite of prices.
Yields rose after data from the Department of Labor showed that hiring slowed in September, even as the unemployment rate dropped. Non-farm payroll in the United States rose by 134,000 in September, seasonally adjusted, the smallest increase in a year. Wages rose 2.8% over the previous year, while the unemployment rate fell to 3.7% from 3.9% in August. Economists surveyed by the Wall Street Journal forecast an increase of 180,000 jobs in September.
Friday's employment report, though weaker than expected, broadly confirms the recent dynamism of the US economy, some analysts said.
The nonagricultural payroll of the United States increased by 134,000 in August, the lowest gain in a year, said Friday the Department of Labor.
Photo:
Rogelio V. Solis / Associated Press
However, as the economy grows, there are fears that it will raise concerns about inflation and tightening monetary policy. This has raised concerns among equity investors fearing strong economic growth, which means that the Federal Reserve will raise rates faster than expected.
Many analysts and traders have said they expect stocks to rise over the course of the year, but anticipate further fluctuations similar to those of Thursday and Friday in the last three months of the year.
"We are going to see more volatility," said Tracie McMillion, Head of Global Asset Allocation at the Wells Fargo Investment Institute. "The market is trying to evaluate: how do you discount stock prices when interest rates rise?"
Investors have sold bonds around the world in recent weeks, but so far, yields have risen faster in the United States than in Europe, with investors anticipating above-average growth.
In other stock markets, the Stoxx Europe 600 lost 0.9%. In Asia, the Nikkei Stock Average of Japan fell by 0.8% and Hong Kong's Hang Seng by 0.2%.
India's S & P BSE Sensex benchmark index drove down Asian markets, down 2.3% as investors anticipated a rate hike by the Reserve Bank of India growing current account deficit and rising world oil prices.
The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, lost 0.1%.
Write to Corrie Driebusch at [email protected]
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