US stock indexes closed lower Tuesday as another swell higher for Treasury yields added pressure on big technology stocks. The S&P 500 lost 0.3%. Banks and small-company stocks rose. The spotlight was again on the bond market, where the yield on the 10-year Treasury rose to 1.73%. Its jump this year has forced investors to reconsider paying such high prices for many stocks, particularly the tech giants that were big winners earlier in the pandemic. Yields perked higher after a report showed consumers are even more confident than economists expected, the AP reports. The S&P 500 fell 12.54 points, or 0.3%, to 3,958.55. The Dow Jones Industrial Average fell 104.41 points, or 0.3%, to 33,066.96.The Nasdaq fell 14.25 points, or 0.1%, to 13,045.39.
The consumer confidence report, and the prospect of more massive government spending, is fueling a sell-off in US bonds, driving their yields higher. "This is spooking debt investors," said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. When bonds pay more in interest, they can make investors less willing to pay high prices for stocks, particularly those seen as the most expensive. Companies that ask their investors to wait years for big profit growth to come to fruition are also hard hit, which has many big technology stocks feeling the most pain from rising rates. Broadcom fell 3.7%, and Cisco Systems dropped 1.1%. Tech giants also fell, including drops of more than 1.3% for Apple and Microsoft. Financial stocks were rallying, in part because higher longer-term interest rates mean bigger profits from making loans.
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