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Investing.com — The Dow slipped Tuesday, as tech was pressured by surging U.S. government bond yields after Federal Reserve officials continued to talk up the prospect of aggressive monetary policy in upcoming meetings.
The Dow Jones Industrial Average fell 0.8%, or 280 points, the S&P 500 fell 1.2%, and the Nasdaq slumped 2.3%.
Federal Reserve Governor Lael Brainard, who is awaiting a confirmation vote to take the reins as Fed vice chair, said the Fed is “prepared to take stronger action, if indicators of inflation and inflation expectations indicate that such action is warranted.”
Brainaird also said the Fed could start to “reduce the balance sheet at a rapid pace as soon as our May meeting.”
The hawkish remarks come ahead of the release of the Fed’s meetings from its March meeting expected to reveal more about the central bank’s plan to begin balance sheeting reduction.
Treasury yields jumped sharply, with the 10-year yield rising above 2.5% rising to a nearly three year high to growth sectors of the market including tech.
Big tech, Facebook (NASDAQ:FB) excluded, was in the red. Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), were down more than 1%, while Amazon.com (NASDAQ:AMZN) was down 2%.
Twitter (NYSE:TWTR), however, bucked the trend lower, adding to its gains from a day earlier after the social media company announced that Elon Musk would join its board.
Consumer discretionary stocks also dragged the broader market lower as weakness in Tesla (NASDAQ:TSLA) and casino stocks including Penn National Gaming (NASDAQ:PENN) and Las Vegas Sands Corp (NYSE:LVS) offset gains in cruise stocks.
Norwegian Cruise Line (NYSE:NCLH) was up 1% and Carnival Corporation (NYSE:CCL) rose more than 2% after the latter reported record one-day bookings, stoking investor optimism about the return of demand for cruises following a pandemic-fueled lull.
Energy stocks were on back foot as oil prices gave up gains even as the European Union detailed plans to impose new sanctions on Russian oil imports.
“If this [an EU embargo on Russia oil] were to happen, demand would switch to an even greater extent to other sources of supply, which would result in considerable price rises,” Commerzbank said in a note.
Devon Energy (NYSE:DVN), Occidental Petroleum (NYSE:OXY) and Marathon Oil (NYSE:MRO) led the sector to the downside.
Utilities and consumer staples, defensives sectors of the market, bucked the trend lower, to end the day in the green.
On the economic front, services activity in March slightly missed forecasts, though economists continue to expect the sector to rebound as the reopening gathers pace.
“Demand for services remains robust, and we expect that this will continue through the Spring and into the Summer at a minimum,” Jefferies said in a note.
In other news, Spirit Airlines (NYSE:SAVE) jumped more than 22% after JetBlue Airways (NASDAQ:JBLU) reportedly offered to buy the airline for $3.6 billion,or $33 per share.
