Sunday, May 28

S&P 500 ends below 4,000 for 1st time since March 2021; growth shares lead decline

  • Nasdaq leads decline
  • Twitter falls as short-seller Hindenburg flags risk to Musk deal
  • Indexes: Dow down 2%, S&P 500 down 3.2%, Nasdaq down 4.3%

NEW YORK, May 9 (Reuters) – The S&P 500 ended below 4,000 for the first time since March 2021 and the Nasdaq dropped more than 4% on Monday in a selloff led by mega-cap growth shares as investors grew more concerned about rising interest rates.

The Nasdaq closed at its lowest level since November 2020. Apple (AAPL.O) shares dropped 3.3% and were the biggest weight on the Nasdaq and the S&P 500.

Investors are worried about how aggressive the Federal Reserve will need to be to tame inflation. The U.S. central bank last week hiked interest rates by 50 basis points.

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Benchmark 10-year U.S. Treasury yields hit their highest levels since November 2018 early in the session.

“Markets are digesting the start of a return to a more normal monetary policy environment,” said Kristina Hooper, chief global market strategist at Invesco in New York.

“Moving more aggressively (on rates) raises the specter of a recession, especially with all of these complications – high inflation, Russia’s invasion of Ukraine, COVID-related supply chain disruptions,” she said.

Investors have also been worried about an economic slowdown in China following a recent rise in coronavirus cases.

The Dow Jones Industrial Average (.DJI) fell 653.67 points, or 1.99%, to 32,245.7, the S&P 500 (.SPX) lost 132.1 points, or 3.20%, to 3,991.24 and the Nasdaq Composite (.IXIC) dropped 521.41 points, or 4.29%, to 11,623.25.

Among the hardest hit in the recent selloff have been technology and growth stocks, whose valuations rely more heavily on future cash flows.

The energy sector (.SPNY) sector fell 8.3% as oil prices dropped.

Twitter Inc (TWTR.N) shares fell more than 3% as Hindenburg Research took a short position on the social media company’s stock, saying the company’s $44 billon deal to sell itself to Elon Musk has a significant risk of getting repriced lower. read more

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Additional reporting by Devik Jain and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta, Anil D’Silva and Aurora Ellis

Our Standards: The Thomson Reuters Trust Principles.

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