US stocks tumbled on Monday dragged by tech-heavyweights like Facebook and Amazon amid rising Treasury yields.
The benchmark S&P 500 fell more than 1.5% – slipping below its 100-day moving average – while the tech-heavy Nasdaq 100 slid more than 2%.
Here’s where US indexes stood at the 4:00 p.m. ET close on Monday:
Global markets in the past weeks have been on a downtrend as investors try to anticipate when the Federal Reserve will begin tapering asset purchases amid inflationary pressures driven by a surge in commodity prices and supply chain issues.
These factors have pushed yields higher, with tech stocks in particular bearing the brunt.
“The Nasdaq is the punching bag as global bond yields rise and as many investors anticipate the cyclical rotation trade will become the playbook after the DC debt drama,” Edward Moya, senior market analyst at foreign exchange Oanda, said in a Monday note.
Also looming is the continuation of the debt ceiling crisis that Congress is trying to avert later this month.
A default would erode trust in the dollar and cause interest rates to soar, which would lift mortgage, car loan, and credit card costs for borrowers. S&P said it would cut its rating to the worst-possible rank of D in the event of a single non-payment on government debt.
Despite this, many analysts, including LPL Financial, remain bullish for the fourth quarter – a period that has historically been best time of year for stocks. Beyond 2021, chief market strategist Ryan Detrick and equity strategist Jeff Buchbinder are also optimistic.
“We see a favorable economic environment for stocks in 2022, consistent with prior mid-cycle expansion years and bolstered by continued earnings growth,” they said in a Monday note. “The gains may not come easy, however, with a number of risks.”
Oil prices spiked after OPEC+ on Monday agreed to keep its existing schedule of gradual hikes in oil production, adding to inflationary pressures engulfing global markets.
Bank of America said last week that Brent crude could hit $100 a barrel for the first time since 2014.
Gold rose 0.17%, to $1,766.30 per ounce.