S&P 500 Sinks as Materials, Tech Weigh

© Reuters.

By Yasin Ebrahim

AiVIF.com – The S&P 500 fell Friday, led by material stocks following a slide in commodities while tech stocks were hurt by a climb in Treasury yields.

The S&P 500 fell 0.6%, the Dow Jones Industrial Average lost 0.9%, or 198 points, the Nasdaq slumped 1%.

Materials stocks continued to add to losses from earlier this week, with mining stocks adding pressure following an ongoing rout in commodities including iron ore.

Freeport-McMoran Copper & Gold (NYSE:FCX), International Flavors & Fragrances (NYSE:IFF), Nucor (NYSE:NUE) led the decline in materials, with the latter down more than 3%

A fall in megacap tech stocks also weighed on the broader market, paced by a decline in Treasury yields.

Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT) were in the red.

The U.S. 10-year Treasury climbed to a more than one-week high, underpinned by positive economic data, and expectations the Federal Reserve is set to offer further clues on plans to tighten monetary policy at next week’s meeting.

The University of Michigan's preliminary consumer sentiment index rose to a reading of 71 in September after falling to 70.3 in August.

“We expect the FOMC to open the door to a possible November taper announcement, conditional on a solid September employment gain,” Jefferies (NYSE:JEF) said in a note ahead of the Fed meeting next week. 

With the broader market on course for a second-weekly loss, some on Wall Street continue to expect further pressure.

“Investor sentiment getting more bearish after the shallow declines of early September: we remain on guard for further volatility ahead as we make our way through the Sept-Oct window. Watch 4400+ for initial support on the S&P here (around the 50-day MA),” Janney Montgomery Scott said in a note.

Energy fell more than 1%, but remains on track to snap a two-week losing streak after strong gains earlier this week on easing fears about the impact of rising Covid-19 cases on energy demand.

The turn lower on Wall Street comes ahead of triple witching, when stock options, stock index futures, and index option contracts expire on the same day, usually triggering a strong bout of volatility as investors move out of old positions and take new ones.