By Caroline Valetkevitch
NEW YORK (Reuters) – U.S. stocks were sharply lower in afternoon trading on Wednesday, with the S&P 500 down more than 1%, as Treasury yields rose above 3% and technology shares fell.
The technology sector was the biggest weight on the S&P 500, with shares of Intel Corp down more than 5% after Citi Research said the chipmaker could pre-announce weaker-than-expected earnings for the second quarter. The Philadelphia Semiconductor SE index was down 2.4%.
The Dow Jones transportation average also underperformed the broader market and was last down 4%.
At the same time, the Cboe Volatility index, Wall Street’s “fear gauge,” rose.
“The 10-year Treasury yield is up over 3%. That’s probably part of why we’re seeing the drawdown in the market today,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“That level is what people are focused on because it represents an increase in interest rates and a reflection of inflation and market volatility.”
U.S. benchmark 10-year Treasury note yields rose after euro zone gross domestic product beat expectations.
The energy sector was down slightly, reversing earlier gains. Brent crude oil prices went above $123 a barrel. [O/R]
The Dow Jones Industrial Average fell 291.61 points, or 0.88%, to 32,888.53; the S&P 500 lost 45.29 points, or 1.09%, to 4,115.39; and the Nasdaq Composite dropped 91.40 points, or 0.75%, to 12,083.83.
Investors are also cautious ahead of U.S. consumer price data on Friday. The report is expected to show that inflation remained elevated in May, though core consumer prices – which exclude the volatile food and energy sectors – likely ticked down on an annual basis.
“People looking for the peak inflation narrative keep getting hit in the face every day as energy goes up,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
The U.S. Federal Reserve is expected to raise rates by 50 basis points at each of its June and July meetings, with a similar move also likely in September, in an effort to combat inflation.
Declining issues outnumbered advancing ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 1.56-to-1 ratio favored decliners.
The S&P 500 posted three new 52-week highs and 29 new lows; the Nasdaq Composite recorded 32 new highs and 59 new lows.
(Additional reporting by Devik Jain and Mehnaz Yasmin in Bengaluru; Editing by Arun Koyyur, Aditya Soni and Jonathan Oatis)