Stock Market Today: Dow Tumbles Again as Tech Slumps, Yields Rise

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The stock market was falling again Wednesday as bond yields rose and fears of high inflation without strong economic growth gripped markets. Technology stocks were under particular pressure.

Futures for the

Dow Jones Industrial Average
indicated an open 326 points lower after the index seesawed this week—dropping more than 300 points Monday before rebounding a similar amount Tuesday to close at 34,314. The

S&P 500
was headed for a 1.1% drop. Futures for the

Nasdaq Composite
were off 1.3% as

Apple

(ticker: AAPL), Facebook (FB) and Amazon (AMZN) slipped 1.3%, 1.4% and 1.1%, respectively.

“Stock futures are down more than 1% and bond yields continue to climb higher amid renewed stagflation fears,” wrote Tom Essaye, founder of Sevens Report Research. 

The 10-year Treasury yield rose to 1.55% from 1.53%, and was above the key level of 1.54%, which signals it may be ready to rise even more. The yield has spiked from 1.31% since the end of September, when the Federal Reserve confirmed it will soon begin tapering, or reducing its bond buying. That would drive less money into the bond market, lowering bond prices and lifting their yields. A surge in bond yields make future profits immediately less valuable, forcing investors to dump stocks.

This comes as the near-term economic picture is looking more bleak, as inflation heats up while economic growth doesn’t necessarily get any better. Factory orders in Germany fell 7.7% month-over-month, worse than the expected 2.1% decline, while retail sales in the European Union rose 0.3%, missing the expected increase of 0.8%. Meanwhile, the supply shortages around the globe that are contributing to the productivity weakness are also creating inflation, which could eat into consumer demand. 

Companies are reporting third-quarter earnings and already, some are not meeting sales expectations because of the shortages, while others are reporting that their profit margins are getting squeezed.

Plus, the more persistent inflation is, the more likely the Federal Reserve is to raise short-term interest rates in 2022. Stagnating economic growth and higher rates could, at some point, put a dent into the economy.

European sentiment was also weighed on amid a global energy crunch that has seen natural-gas prices in the region rise more than 500% since the beginning of the year—spiking 20% on Tuesday alone.

Elsewhere, the New Zealand central bank raised rates for the first time in seven years with a hike of the main cash rate by 25 basis points to 0.5%. The Reserve Bank of New Zealand warned about persistent cost pressures and how inflation was expected to rise above 4% in the near term.

Here are six stocks on the move Wednesday

Palantir Technologies

(PLTR) rose 8.5% in the premarket trade, after the company said late Tuesday it won an $823 million U.S. Army intelligence contract.

Novavax

(NVAX) was down 5.1% in the premarket, set to continue a 4.6% fall Tuesday after the company announced a number of new leadership appointments.

United States Steel
Corp.
(X) and

Nucor

(NUE) were falling 4.5% and 3.1%, respectively, after Goldman Sachs downgraded both companies. U.S. Steel was cut to Sell from Neutral, while Nucor was cut to Neutral from Buy. 

American Airlines

(AAL) stock fell 4% after Goldman Sachs downgraded it to Sell from Neutral. The investment bank also downgraded

JetBlue Airways

(JBLU) to Neutral from Buy. JetBlue shares dipped 2.3%.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com