A choppy day on Wall Street ended with stocks mostly lower Friday, helping push the S&P 500 to
its second straight weekly loss.
Investors continued to watch the bond market, where Treasury yields eased lower, as well as Washington,
where Congress is expected to vote on President Joe Biden’s stimulus package.
Losses in banks and health care stocks helped drag the S&P 500 down 0.5%, erasing an early gain.
Falling oil prices weighed on energy stocks. Technology and communication services companies, which bore
the brunt of the selling a day before, recovered slightly, which helped the tech-heavy Nasdaq composite
manage a 0.6% gain.
Bond yields eased off of their multi-week climb. The yield on the 10-year U.S. Treasury fell to 1.42%
from 1.51%. late Thursday.
"We still think the uptrend in (stocks) is very much intact and that they’ll outperform bonds in the
coming year," said Sameer Samana, senior global market strategist at Wells Fargo Investment
The S&P 500 index fell 18.19 points to 3,811.15. Despite a two-week slide, the index managed a
2.6% gain for February after a 1.1% loss in January.
The Dow Jones Industrial Average dropped 469.64 points, or 1.5%, to 30,932.37. The Nasdaq gained 72.91
points to 13,192.34. The index still posted its biggest weekly loss since October. The Russell 2000
index of smaller companies eked out a small gain, adding 0.88 points, or less than 0.1%, to 2,201.05.
The indexes remain close to the all-time highs they set earlier this month.
A sell-off on Wall Street Thursday picked up speed when the yield on the 10-year U.S. Treasury note rose
above 1.5%, a level not seen in more than a year and far above the 0.92% it was trading at only two
months ago. That move raised the alarm that yields, and the interest rates they influence, will move
higher from here.
The recent rise in bond yields reflects growing confidence that the economy is on the path to recovery,
but also expectations that inflation is headed higher, which might prompt central banks eventually to
raise interest rates to cool price increases. Rising yields can make stocks look less attractive
relative to bonds, which is why every tick up in yields has corresponded with a tick down in stock
"Investors should look at this as an affirmation that the recovery is taking hold," Brian
Levitt, Global Market Strategist at Invesco.
Samana said he still expects interest rates will continue to rise, but at a slower pace.
Technology stocks have been impacted more than the broader market by the rise in bond yields. Tech stocks
tend to trade at higher valuations than the overall market. Investors are also betting that with
vaccinations, the coronavirus pandemic may be coming to an end which would pivot consumer behavior away
from online-only shopping.
In Washington, Democrats in Congress are preparing to move forward with President Biden’s $1.9 trillion
stimulus package, with a vote in the House of Representatives planned for Friday. The Senate could vote
on the package as early as next week.
The stimulus bill would include yet another round of one-time payments to most Americans, including an
expansion of other refundable tax credits like the child tax credit, as well as additional aid to state
and local governments to combat the pandemic.