Technology stocks came under renewed pressure on Wednesday while the Dow Jones Industrial Average set a fresh record high, with investors turning away from tech. and growth stocks in anticipation of higher rates.
The S&P 500 drifted lower to pull back further from Tuesday’s record intraday high. The Nasdaq also dropped and underperformed the other two major equity indexes. Apple (AAPL) shares steadied following a decline a day earlier, which pulled the stock back after reaching a $3 trillion market capitalization for the first time ever at the start of the week.
Investors Wednesday morning also digested fresh upbeat economic data, as private payroll gains handily exceeded estimates for December. ADP said Wednesday that private sector employers added back 807,000 jobs during the final month of November, nearly doubling expectations as job growth picked up to help alleviate some labor shortages.
In the first few trading days of the new year, investors have piled into cyclical areas of the market, with shares of companies seen as the biggest beneficiaries of a firming economic recovery and rising interest rates outperforming. The energy, financials and industrials sectors outperformed in the S&P 500 on Tuesday, and the Dow Jones Industrial Average composed heavily of cyclical stocks rose by more than 200 points to set an all-time closing high.
Treasury yields steadied after moving sharply higher on Monday and Tuesday, which had added pressure to technology and growth stocks valued heavily on future earnings potential. The benchmark 10-year yield jumped further above 1.6% to reach its highest level since November, albeit while remaining low on a historical basis.
