By Yasin Ebrahim
Investing.com -- The S&P 500 slumped Monday, paced by a tech-led slump as surging U.S. Treasury yields kept the pressure on growth sectors of the market including tech.
Technology stocks, which snapped a three-week winning streak last week, started the week on the back foot, as Treasury yields continued to rack up gains on expectations of a more aggressive pace of Federal Reserve monetary policy tightening next month.
“U.S. bond yields are on the rise as investors continue to digest the Fed’s more hawkish position. As a result, the 10-year yield has pushed from 2.40% to 2.74% in the past week,” Stifel said in a note.
The Fed’s plan to curb inflation will come under added scrutiny on Tuesday as the U.S. is expected report that the pace of inflation in March rose at annual rate of 8.4%, a four-decade high.
Microsoft (NASDAQ: MSFT ), down more than 3%, led the decline in big tech after UBS estimated that Office 365, the tech giant's second-biggest business, will likely see declining growth ahead as the boost from the pandemic and work from home trend fades.
Twitter (NYSE: TWTR ), meanwhile, bucked the trend lower after Tesla (NASDAQ: TSLA ) chief executive Elon Musk made a u-turn on a decision to join the social media's board, paving the way for Musk to buy more shares of Twitter. Joining the board of Twitter, would have limited Musk to owning no more than 14.9% of the company.
Semiconductor stocks also pressured the broader tech sector as sentiment on chipmakers was hurt after Baird downgraded Nvidia (NASDAQ: NVDA ) to neutral from outperform and cut its price target on the stock to $225 from $360, sending its shares down more than 5%.
Baird flagged order cancellations for Nvidia’s consumer GPUs, and said the upcoming fork for cryptocurrency Ethereum could further dent demand.
Financials, mostly banks, relatively outperformed the broader market, down just 0.2%, boosted by rising yields ahead of the start of the quarterly earnings season.
Energy stocks were also a big drag on the broader market even as oil prices were pressured by worries about the impact on demand from lockdowns in China.
In other news, Sony (NYSE: SONY ) detailed plans to invest an additional $1 billion investment in Epic Games in a deal that further expands its collaboration with the video game maker.
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