The Nasdaq Composite fell Tuesday as an uptick in rates put pressure on the tech-heavy index.
The tech-heavy Nasdaq shed 0.45% to close at 11,716.08. The S&P 500 fell 0.16%, ending at 3,971.27. The Dow Jones Industrial Average lost 37.83 points, or 0.12%, and closed at 32,394.25.
Bond yields rose, with the rate on the 2-year U.S. Treasury note climbing back above 4%, putting pressure on stocks and tech names in particular. Rising rates make future profits, like those promised by growth companies, less attractive.
“For the second day in a row, interest rates are rising, and the markets are being led by the more economically sensitive sectors, such as energy and industrials,” said Brian Levitt, global market strategist for Invesco.
“Technology stocks are among the laggards, which is often the case as interest rates rise,” he added. “For the time being, investors seem to be looking beyond the challenges in the financial sector and recognizing that U.S. economic growth continues to be resilient.”
Worries about the crisis among U.S. regional banks have been assuaged thanks in part to policymakers’ efforts to alleviate the challenges. Investors’ fear that higher rates could push the economy into a recession came back into focus.
However, bank stocks slipped on Tuesday following a contentious hearing at the Senate Banking Committee. Three top regulators each said they favor more stringent rules for banks with more than $100 billion in assets.
KRE”Bank stocks turned negative following a contentious hearing before the Senate Banking Committee. Three top regulators each said they favor for stringent rules for banks with more than $100 billion in assets. Regional banks fell 1% in afternoon trading”
The moves follow a mixed session on Monday. Investors fought to extend last week’s gains, but tech shares came under pressure. The Dow Jones Industrial Average added 194.55 points, or 0.6%, while the S&P 500 gained 0.16%. The Nasdaq Composite dipped 0.47% as tech stocks moved lower.
