Wall Street closes lower to start the week

May 18, 2021 - 1 month ago
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Technology stocks weighed on Wall Street’s main indexes on Monday and ended the day in negative territory, as concerns about inflation continued to unsettle investors.

At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average dipped -54.34 points, or -0.16%, to 34,327.79.

The broad-based Standard & Poor’s 500 Index dropped -10.56 points, or -0.25%, to 4,163.29.

The rich-tech-heavy Nasdaq Composite Index declined -50.93 points, or -0.38%, to 13,379.05.

The yield on the 10-year Treasury has shot higher this year amid the inflation fears. It was at 1.65% late Monday, up from 1.63% at the end of last week. It began the year close to 0.90%.

Apple and Netflix both slid -0.9%, while Microsoft tumbled -1.2%; meanwhile, Tesla dropped more than -2% as famed investor Michael Burry on Monday revealed in a regulatory filing a short position against Tesla worth more than half a billion.

Burry, one of the first investors to call and profit from the subprime mortgage crisis, is long puts against 800,100 shares of Tesla or $534 million by the end of the first quarter, according to the filing with the U.S. Securities and Exchange Commission.

Investors profit from puts when the underlying securities fall in prices. As of March 31, Burry owned 8,001 put contracts, with unknown value, strike price, or expiry, according to the filing.

The tech-heavy Nasdaq Composite, particularly sensitive to inflation fears, dropped -2.3% last week, while the blue-chip Dow slipped -1.1% in that period.

Communication services stock Discovery bucked that trend after AT&T announced Monday that it would merge WarnerMedia, which includes HBO, with Discovery. Discovery’s Class B stock jumped nearly +14%, while AT&T ended the day slightly lower after hitting a record high earlier in the session.

Lingering concerns about inflation and the outlook for monetary policy weighed on Wall Street ahead of the release of the U.S. Federal Reserve minutes from its last meeting this Wednesday, which could offer some clues on policymakers’ thinking on inflation.

Federal Reserve Vice Chairman Richard Clarida, the Fed’s second-in-command, said the U.S. economy had yet to reach the “substantial further progress” that would be needed before the Fed pared-back bond purchases.

Another member of the Fed’s rate-setting committee, Federal Reserve Bank of Atlanta President Raphael Bostic, said he was not ready for the central bank to dial back its support for the economy.

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