Stocks are dropping in Thursday morning trading on Wall Street, with energy stocks taking the hardest hits as the price of oil falls back, despite a round of encouraging reports on the economy.
The S&P 500 was 0.6% lower for the latest ebb in the back-and-forth trading it’s gone through the last few weeks. Roughly three out of four stocks in the index were falling, but sharp swings for Apple and a handful of other heavyweights helped it to pull nearly all the way back to breakeven for a moment earlier in the morning.
The market has been mostly tumbling in place recently, with support for stocks coming from expectations that the economy will soar soon thanks to COVID-19 vaccinations and huge amounts of spending by Washington. A quick rise in interest rates has undercut stocks at the same time, though.
The Dow Jones Industrial Average was down 253 points, or 0.8%, at 32,167, as of 10:49 a.m. Eastern time. The Russell 2000 index of smaller stocks was down 1.2%, putting it more than 10% below the record it set early last week.
Stocks of energy producers dropped to the market’s sharpest losses after the price of U.S. oil slumped 5.3% to $57.91 per barrel. Diamondback Energy fell 6.1%, and Halliburton dropped 5.3%.
Oil’s price was giving back a big portion of its 6% jump from a day earlier, when it climbed above $61 per barrel after a skyscraper-sized cargo ship wedged itself across Egypt’s Suez Canal and raised worries about supply disruptions.
Yields in the Treasury market also continued to ease after the 10-year yield spiked above 1.70% last week, its highest level since before the pandemic started. The 10-year Treasury yield, which helps set rates for all kinds of loans, dipped to 1.60% from 1.61% late Wednesday.
The decline came despite a report showing that the number of workers filing for unemployment benefits eased to its lowest level since before the pandemic erupted a year ago. Another report said the U.S. economy grew at a faster pace at the end of 2020 than earlier estimated.
Moves in Treasury yields have been a major reason for the swings in the stock market in recent weeks. When bonds pay more in interest, they make investors less willing to pay high prices for stocks. Businesses that are asking investors to wait many years for their big profits to begin rolling in are affected even more.
Technology stocks have borne the brunt of the pain of higher interest rates, and they’re also among the biggest companies in the market in terms of value.
Big tech stocks swung back and forth in Thursday morning trading, and Apple was down 0.5%. Microsoft was 1% lower after crossing between a gain and loss several times in the first hour of trading. Tesla was 1.5% lower after earlier swinging between a loss of 3.3% and a gain of 1.3%.
Treasury yields have been broadly rising with expectations for stronger economic growth and the inflation that may accompany it. The market got a particularly hard jolt a month ago, when an auction of seven-year Treasurys found relatively few bidders. Analysts called it a “horrifically bad” auction, and it helped send yields jumping. A bond’s yield rises when its price drops.
Another auction of seven-year Treasurys is scheduled for later in the day.
In European stock markets, Germany’s DAX lost 0.6%, and the French CAC 40 fell 0.5%. The FTSE 100 in London dropped 0.9%.
In Asia, Japan’s Nikkei 225 rose 1.1%, and South Korea’s Kospi added 0.4%. Hong Kong’s Hang Seng pulled back by 0.1%, and stocks in Shanghai slipped 0.1%.
