Market Snapshot: Dow edges lower as bond yields resume rise

Rising yields were lifting the U.S. dollar and weighing on technology stocks and other growth-oriented shares. Technology and growth stocks are more sensitive to rising bond yields as the net present value of their future earnings growth is reduced more by the higher discount rate implied by rising bond yields.

“The latest moves seem tied to resurgent concerns around inflation. Market-based inflation measures have shot higher as well, perhaps as investors brace for Biden’s multi-trillion infrastructure announcement tomorrow,” said Marios Hadjikyriacos, investment analyst at XM, in a note. President Joe Biden is slated to unveil details of his infrastructure plan in a speech in Pittsburgh on Wednesday.

“Coming on top of the latest avalanche of federal spending, such an enormous investment package could turbocharge economic growth and by extension inflationary pressures,” he said.

Biden’s infrastructure plan, meanwhile, is expected to cost as much as $3 trillion to $4 trillion, offset by tax hikes of up to $3 trillion.

Read: Here’s what tax hikes could mean for the stock market as Biden pushes infrastructure plan

Meanwhile, investors were on the lookout for any further selling of stocks after a large margin call on equity derivatives held by Archegos Capital Management that forced an estimated $30 billion in block sales, triggering plunges in shares of widely held media companies whose stocks were liquidated. Big bank shares were also dented due to worries about their exposure to Archegos.

Read: Here are the complex bets at the heart of ‘unprecedented’ Archegos-linked $30 billion margin call

The Case-Shiller home price index for January showed an 11% year-over-year rise. A March consumer-confidence index is due at 10 a.m.

Randal Quarles, Fed vice chair for supervision, was scheduled to deliver remarks at 9 a.m., while New York Fed President John Williams is slated to speak at 2: 30 p.m.

Which companies are in focus?

• Shares of ViacomCBS Inc. VIAC, +1.71% were up 3% after falling nearly 7% Monday and suffering steep losses last week in moves tied to the Archegos liquidation.
• Shares of Goldman Sachs Group Inc. GS, +1.95% and Morgan Stanley MS, +1.58% each rose more than 1% . The banks moved large blocks of assets before other large banks that traded with Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to The Wall Street Journal, helping to limit their losses amid the stock liquidation.
• PayPal Holdings Inc. PYPL, -0.57% shares were off 0.3% after the payments company said it would start letting U.S. customers purchase items with cryptocurrencies.
• Shares of videogame-retailer GameStop Corp. GME, +2.81% rose 3.5% after it announced the appointment Tuesday of former Amazon executive Elliott Wilke to the role of chief growth officer effective April 5. Wilke has held a range of roles at Amazon in branding, consumer goods and e-commerce, in segments including Amazon Fresh, Prime Pantry and Worldwide Private Brands.

How are other markets trading?

• The ICE U.S. Dollar Index DXY, +0.39%, a measure of the currency against a basket of six major rivals, was up 0.2%.
• Oil futures were under pressure as the Suez Canal reopened to traffic and traders turned their attention to this week’s OPEC+ meeting, with the U.S. benchmark CL.1, -1.82% down 1.3% at $60.76 a barrel.
• Gold futures were under pressure as Treasury yields and the dollar rose, with the June contract GCM21, -1.67% down 1.9% at $1,682.50 an ounce.
• In Europe, the Stoxx 600 index SXXP, +0.48% was up 0.3%, while London’s FTSE 100 UKX, +0.19% rose 0.1%.
• In Asia, the Shanghai Composite SHCOMP, +0.62% rose 0.6%, while Hong Kong’s Hang Seng Index HSI, +0.84% rose 0.8% and Japan’s Nikkei 225 NIK, +0.16% was up 0.2%.