(bloomberg.com) – Tech shares led a decline in U.S. stocks amid concern that valuations had gotten out of hand amid higher bond yields and bets on faster inflation.
The Nasdaq 100 was about 1.5% lower midday and headed to its longest losing streak since 2019, but off the worst of its losses after Chairman Jerome Powell signaled the Federal Reserve was nowhere close to pulling back on its support for the U.S. economy. Airlines, lodging companies and cyclical shares set to benefit from the end of pandemic lockdowns outperformed, limiting losses for the Dow Jones Industrial Average. A similar rotation was underway in European stocks.
So-called growth shares are having their worst month against value counterparts in more than two decades as vaccination campaigns gather pace and bond yields hover near a one-year high. Bets on faster growth have pushed the gap between 5- and 30-year yields to the highest level in more than six years.
Investors are growing concerned that broad equity benchmarks have already priced in much of the prospective global recovery spurred by vaccines and U.S. stimulus. As Powell reassured investors on stimulus, he voiced expectations for a return to more normal, improved activity later this year and said that higher bond yields reflected economic optimism.
Elsewhere, stocks in Asia were mostly higher. Bitcoin retreated below $50,000 after a bout of volatility highlighted lingering doubts about the durability of the token’s rally.