Nasdaq Posting Steep Loss As Treasury Yields See Further Upside

After fluctuating early in the session, stocks have moved mostly lower over the course of morning trading on Tuesday. The major averages are extending the pullback seen late in the previous session, with the tech-heavy Nasdaq showing a steep drop.

Currently, the major averages are all in negative territory, although the Nasdaq is underperforming its counterparts. While the Nasdaq is down 166.13 points or 1.1 percent at 15,688.63, the Dow is down 47.31 points or 0.1 percent at 35,571.94 and the S&P 500 is down 17.18 points or 0.4 percent at 4,665.76.

The Nasdaq is pulling back further off the record intraday high set in early trading on Monday, as a continued increase in treasury yields weighs on high-growth tech stocks.

Yields have moved notably higher since President Joe Biden announced his intention to nominate Jerome Powell for a second term as Fed Chair.

While Biden also intends to nominate current Fed Governor Lael Brainard as Vice Chair, she was seen as a potentially more dovish alternative to Powell.

Overall trading activity remains somewhat subdued, however, with a lack of major U.S. economic data keeping some traders on the sidelines ahead of the release of a slew of reports on Wednesday.

Reports on weekly jobless claims, durable goods orders, new home sales and personal income and spending are likely to attract attention.

Some trades may also be looking to get a head start on the Thanksgiving Day holiday, as the markets will be closed on Thursday and open for just a half-day on Friday.

Software stocks are extending the sell-off seen in the previous session, resulting in a 2.1 percent nosedive by the Dow Jones U.S. Software Index.

With the steep drop, the index continues to give back ground after ending last Friday’s trading at a record closing high.

Continued weakness is also visible among gold stocks, as reflected by the 2 percent slump by the NYSE Arca Gold Bugs Index.

The weakness among gold stocks comes as the price of the precious metal is seeing further downside, with gold for December delivery tumbling $20.70 to $1,785.60 an ounce.

Biotechnology stocks are also seeing significant weakness in morning trading, dragging the NYSE Arca Biotechnology Index down by 2 percent to its lowest intraday level in over eight months.

On the other hand, energy stocks are regaining ground amid a continued rebound by the price of crude oil. Crude for January is currently jumping $1.12 to $77.87 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 2.8 percent, the NYSE Arca Oil Index is up by 2.5 percent and the NYSE Arca Natural Gas Index is up by 1.7 percent.

Steel and banking stocks are also seeing notable strength on the day, partly offsetting the weakness in the aforementioned sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index rose by 0.2 percent, while Hong Kong’s Hang Seng Index slumped by 1.2 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.3 percent, the French CAC 40 Index is down by 0.6 percent and the German DAX Index is down by 1 percent.

In the bond market, treasuries are extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 1.646 percent.