Picture: REUTERS/CARLO ALLEGRI
Picture: REUTERS/CARLO ALLEGRI

New York — The Nasdaq ended sharply lower on Wednesday after investors sold high-flying technology shares and pivoted to sectors viewed as more likely to benefit from an economic recovery on the back of fiscal stimulus and vaccination programmes.

Microsoft, Apple and Amazon dropped, weighing more than any other stocks on the S&P 500.

The S&P 500 financial and industrial sector indices reached intra-day record highs. Most other S&P 500 sectors declined.

The Russell 1000 value index, which leans heavily on economy-linked sectors, edged up, while its growth index, comprising large tech companies, lost ground.

"Today is the perfect encapsulation of the big theme we've been seeing in the past couple of months: The vaccine rollout is going well and the economy improving, and that is sending yields and rate expectations higher, which is hurting growth stocks," said Baird investment strategist Ross Mayfield, in Louisville, Kentucky.

Unofficially, the Dow Jones industrial average fell 119.08 points, or 0.38%, to 31,272.44, the S&P 500 lost 50.46 points, or 1.30%, to 3,819.83 and the Nasdaq Composite dropped 361.04 points, or 2.7%, to 12,997.75.

The US economic recovery continued at a modest pace over the first weeks of this year, with businesses optimistic about the months to come and demand for housing "robust", but only slow improvement in the job market, the Federal Reserve reported.

While the vaccine distribution is expected to help the economy, data showed US private employers hired fewer workers than expected in February, suggesting the labor market was struggling to regain speed.

Another report showed US services industry activity unexpectedly slowed in February amid winter storms, while a measure of prices paid by companies for inputs surged to the highest level more than 12 years.

The US 10-year Treasury yield ticked up to 1.47%, putting pressure on areas of the market with high valuations. It was still off last week's peak of above 1.61% that roiled stock markets as investors bet on rising inflation.

"There is a definite headwind for equity markets if yields go above the 1.5% level with most investors keeping an eye on the pace of yield growth," said Michael Stritch, chief investment officer at BMO Wealth Management.

President Joe Biden's proposed $1.9-trillion coronavirus relief bill would phase out $1,400 payments to high-income Americans in a compromise with moderate Democratic senators, according to legislators and media reports.

Exxon Mobi  rose after the oil major unveiled plans to grow dividends and curb spending with projections that were less bold than previous years.

Reuters

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