Stock Market Declines As Yields Rise; Tech, Consumer Discretionary, Energy Are The Worst

Indexes were lower Monday at midday as technology shares led the selling, but defense stocks gained.

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The Nasdaq composite slid 1.7%. The S&P 500 dropped 1.2%. The Dow Jones Industrial Average eased 0.5% as tech components Apple (AAPL), Microsoft (MSFT) and Google parent Alphabet (GOOGL) tumbled more than 2%.

The Technologies Select ETF (XLK) was the worst sector, plunging 3.5%, followed by Consumer Discretionary (XLY), falling 2.8%.

The small-cap Russell 2000 lost 0.5%. Volume rose on the NYSE and Nasdaq compared with the same time on Friday.

The yield on the 10-year Treasury note rose nearly 10 basis points to 2.76%, its highest level since March 2019, as a sell-off in bonds continued. Last week, the benchmark yield jumped more than 30 basis points.

Defense Stocks Lead Gainers

The S&P industrials led sectors, with the SPDR Select Sector Industrials up 0.6% Monday at  midday. They were led by defense stocks, as the war in Ukraine rages on and Western countries consider expanding their defense budgets. Last week, President Joe Biden said he would ask Congress to increase the U.S. defense budget.

Ukraine said tens of thousands of people were killed in the city of Mariupol.

Raytheon Technologies (RTX) jumped 2.1% Monday. The stock is in a flat base and is approaching a 104.44 buy point. RTX stock is actionable from a rebound off its 10-week line.

Raytheon makes missile defense systems, aircraft engines and communications technology. Russia’s invasion of Ukraine has increased demand for guided artillery. The U.S. has been sending missiles and other equipment to Ukraine. That includes the Javelin anti-tank missile, made by Raytheon and Lockheed Martin (LMT).

Lockheed Martin gained 2.6%. Lockheed’s F-35 fighter jet is poised to see a major ramp-up in production soon. General Dynamics (GD), Northrop Grumman (NOC) and Boeing (BA) all jumped more than 1%.

Energy Sector Leads Stock Market Losses

The Energy Select Sector SDPR (XLE) tumbled 1.8%, erasing most of Friday’s gains. The price of U.S. benchmark crude oil fell nearly 4% to $94.55 a barrel. Covid-related lockdowns in China and the release of reserve oil stockpiles have put pressure on oil prices.

Twitter (TWTR) was up modestly after Tesla CEO Elon Musk decided not to join Twitter’s board of directors. Twitter CEO Parag Agrawal announced Musk’s decision, though no specific reason was given.

Shares of Twitter rallied last week after Musk disclosed a 9.2% stake in the company, and then was named to Twitter’s board.

IBD 50 Down 1.5%

Innovator IBD 50 ETF (FFTY) fell 1.5%. IBD 50 stock Costamare (CMRE) fell 1% and is now trading below its 50-day moving average. With shares below the 16.75 buy point of a cup with handle, the shipping stock has hit a sell signal.

Wells Fargo (WFC) rose 1.8% as it continues to work on a cup base with a 60.40 buy point. Citigroup today upgraded the bank to buy from neutral ahead of the company’s earnings report on Thursday.

Nvidia (NVDA) gapped down to a loss of nearly 6% and is on track for a fifth straight decline. An analyst at Robert W. Baird downgraded Nvidia to neutral from outperform and cut the price target to 225 from 360. Analyst Tristan Gerra said he believes order cancellations have started in consumer graphics chips, Barron’s reported.

Follow Michael Molinski on Twitter @IMmolinski

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