U.S. stocks dropped Thursday, weighed down by declines in technology shares.
The Dow Jones Industrial Average slumped 1.2% in afternoon trading after closing Wednesday at an all-time high. The S&P 500 fell 1.8%, and the Nasdaq Composite lost 2.7%.
Stocks have wobbled the past week as investors have grappled with a sharp and swift rise in bond yields. The shift, which money managers have broadly attributed to bets on inflation and growth picking up, has tempered enthusiasm for some of the pricier sectors of the stock market.
The S&P 500 technology sector slid 2.2% Thursday, among the worst-performing groups in the index. Meanwhile, parts of the market thought to benefit most from rising economic growth, like financials and energy, wobbled between small gains and losses.
“The market is jittery. The bond yields’ rising is putting equities, especially growth stocks, under pressure,” said
Sebastien Galy,
a macro strategist at Nordea Asset Management. “There is a bit of a risk reduction broadly.”
One group of stocks that bucked the trend: “meme stocks” that have surged in popularity among individual investors this year.
In a wave of volatility reminiscent of last month’s rally,
jumped 46%, while
climbed 7%. The two stocks had soared in overnight trading as well.
The moves show “there is still liquidity and a lot of access to speculative bets,” said Sophie Chardon, cross asset strategist at Lombard Odier. “We have to be prepared to live with this kind of targeted bubble, but I wouldn’t see it as a threat to the global equity market.”
Meanwhile, government bond prices fell, with the yield on the benchmark 10-year Treasury note ticking up to 1.460%, from 1.388% Wednesday.
“The rise in yields is supportive for banks, higher oil prices are supportive for energy. It is a change of leadership,” Ms. Chardon said.
Overseas, the pan-continental Stoxx Europe 600 edged down 0.3%.
Among individual equities, beer maker
fell almost 7% after its fourth-quarter profit came in below estimates.
Traders worked on the floor of the New York Stock Exchange on Wednesday.
Photo:
Nicole Pereira/Associated Press
British packaging company
jumped over 5% on reports that rival Mondi is exploring a takeover.
Investors have also been selling European government bonds in recent weeks as they look for higher returns. The yield on French 10-year bonds, which moves inversely to the price, ticked up above zero for the first time since June and reached as high as 0.024%.
In Asia, most major benchmarks finished the day up.
The Shanghai Composite Index added 0.6%, snapping a three-day losing streak, and Hong Kong’s Hang Seng Index climbed 1.2%.
South Korea’s Kospi Index rallied 3.5% after its central bank kept interest rates at historic lows, citing a need to continue supporting the country’s economy.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane Otani at akane.otani@wsj.com
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