Wall Street Close: Tech rout, upbeat US Treasury yields weigh on equity benchmarks

• DJI and Nasdaq 100 drop over 100 points, S&P 500 declines 0.53%.
• US Senator Josh Hawley introduced “Bust Up Big Tech Act”, dimmed charm IBM’s upbeat earnings.
• US Treasury yields rally the most in over a week amid vaccine optimism, aftershocks of Friday’s US data.
• More earnings, covid updates and US Infrastructure spending will be the key.

US equity markets couldn’t keep Friday’s upbeat performance as all three benchmarks dropped at the start of the key earnings week. Although upbeat Treasury yields were largely blamed, tech rout and uncertainty over US President Joe Biden’s $2.25 trillion infrastructure spending plan also weighed on the risk barometers.

The Dow Jones Industrial Average (DJI30) dropped 123 points, or 0.36%, by the end of Monday’s trading while Nasdaq shed the most, down 137.58 points or 0.97%, amid tech rout. Further, S&P 500 Futures eased 0.53% from the record top by closing around 4,163.28.

US 10-year Treasury yield rose 3.2 basis points (bps) to regain 1.61% level, rising the most since April 04, as markets turn optimistic over the world’s largest economy following Friday’s strong data. Also favoring the yields were chatters over more than 25% of Americans being vaccinated and a reduction in the covid figures. On the negative side were fears of the pandemic in Europe and Asia as new strains keep troubling markets amid slower vaccinations than America and the UK.

Elsewhere, US Senator Hawley finally introduced a bill that could crunch the big tech companies and hence weighed on technology shares even as IBM surprises markets with revenue gains.

US Republicans stay firm in rejecting the $2.25 infrastructure spending and push for a lesser tax, which in turn circulated rumors over President Biden’s proposal of 24% tax versus 28% earlier backed figure. However, Politico’s Melanie Zanona recently tweeted, “At today’s White House meeting, Biden told Republicans to come back to him w/ an infrastructure proposal by mid-May. Biden also signaled he’d be willing to come down on the proposed corporate tax rate. But Rs don’t want to see a hike; they prefer user fees.”

Looking forward, Tuesday’s Netflix earnings will be the key to watch while updates over the virus and infrastructure spending may entertain trades amid a light economic calendar.