The S&P 500 was led lower by the real estate and consumer discretionary sectors, while energy companies were the biggest gainers in the benchmark index. Eli Lilly & Co. lifted heath-care shares. The dollar strengthened against all its major peers, with demand supported by elevated Treasury yields.
Weighing on the minds of investors are worries that equities are running too hot and valuations are stretched at a time when major parts of the world are grappling with the worst of the covid-19 pandemic.
"Keep in mind though, after big runs like we saw last week, it's natural for the market to take a breather," said Chris Larkin, managing director of trading and investing product at E*Trade Financial. "Traders looking for new opportunities may be wise to look beyond behemoth tech stocks."
Benchmark Treasury yields topped 1% last week on bets that Democratic lawmakers will enact big spending packages to drive the economic recovery out the pandemic. The move reset expectations for a range of asset classes and sparked debate over whether higher yields might jeopardize the current environment of easy financial conditions.
Ten-year U.S. yields climbed to almost 1.14% on Monday, the highest level since March.
"Ultimately it goes back to the 10- year," wrote KC Rajkumar and Jahanara Nissar of Lynx Equity Strategies. A higher yield "points to higher inflation down the road -- which is negative for stocks. We are not there yet, but as the 10-year inches higher -- the closer we get."
Twitter Inc. fell after the social media platform permanently banned President Donald Trump after a mob invaded the Capitol building last week. Mirabaud Securities analyst Neil Campling said the ban shows the company is making editorial decisions, and opens the door to more regulation of social media under the next administration.
Shares of Facebook Inc., which also suspended Trump's account, also declined. Meanwhile, House Democrats Monday introduced a resolution to impeach Trump for a second time, setting up a vote this week unless Vice President Mike Pence uses his constitutional authority to remove the president.
Bitcoin tumbled, with prices sliding as much as 20% on Monday. Some investors have said the digital currency's recent gains defy logic and the U.K.'s financial watchdog issued a statement that consumers in crypto should be prepared to lose all their money. The token traded down about 14% at $32,835.
Elsewhere in markets, the MSCI Asia Pacific Index slipped. Commodities were broadly lower on the back of the stronger dollar, with West Texas Intermediate oil trading near $52 a barrel.
These are some of the main moves in markets:
The S&P 500 Index declined 0.7% to 3,799.61 as of 4 p.m. EST, the first retreat in a week.
The Dow Jones industrial average dipped 0.3% to 31,008.69, the first retreat in a week.
The Nasdaq Composite Index declined 1.3% to 13,036.43, the largest drop in a week.
The Stoxx Europe 600 Index sank 0.7% to 408.41, the biggest dip in three weeks.
The MSCI All-Country World Index sank 0.7% to 658.67, the first retreat in a week and the largest decrease in three weeks.
The Bloomberg Dollar Spot Index rose 0.5% to 1,126.98, the highest in two weeks.
The euro sank 0.5% to $1.2156, the weakest in almost four weeks on the largest decrease in more than a week.
The British pound declined 0.3% to $1.3521, the weakest in almost two weeks.
The Japanese yen depreciated 0.2% to 104.17 per dollar, the weakest in more than a month.
The yield on 10-year Treasurys gained two basis points to 1.13%, reaching the highest in about 10 months on its seventh straight advance.
Germany's 10-year yield gained two basis points to -0.50%, the highest in two months.
Britain's 10-year yield gained 31 basis points to 0.309%, its fifth straight advance and the biggest advance on record.
West Texas Intermediate crude dipped 0.3% to $52.10 a barrel, the first retreat in a week.
Copper declined 3% to $3.56 a pound, the lowest in a week.
Published : January 12, 2021
By : Syndication Washington Post, Bloomberg · Vildana Hajric, Kamaron Leach