Wall Street mixed as yields uptick weighs on tech; Boeing soars

By Ambar Warrick and David French

(Reuters) – Wall Street indexes were showing mixed performance on Monday as technology stocks reversed course on concerns over rising Treasury yields, although possible plane orders stemming from the Dubai Airshow pushed up Boeing and the Dow Jones benchmark.

The Nasdaq gave up early gains to trade lower, as heavyweight technology stocks retreated. Higher Treasury yields tend to weigh on tech, as they discount future earnings from the sector.

Bank stocks benefited from rising yields, with the financials sector adding 0.3%. Yields rose as investors positioned for potential effects of the Federal Reserve’s tapering.

“Watch for interest rates to apply some pressure to the tech stocks. So if we do get higher rates – tech will slow down a little bit and a rotation to financials makes sense in that scenario. Higher rates, banks make more money,” said Jay Pestrichelli, chief executive of investment firm ZEGA Financial.

The uptick in yields also threatened to nix the seven-day rally in gold prices, with spot gold hitting its highest level since mid-June on Monday before falling.

Boeing Co was the top boost to the Dow Jones, rising 5% to a three-month high after Emirates announced an order for two 777 Freighters and as Saudi Arabian Airlines was in talks with the planemaker for a wide-body jet order.

The Dubai event is the first major aerospace conference since the pandemic decimated passenger air travel, with investors watching to see how the industry is coping with new dynamics.

Electric carmaker Tesla Inc fell 4.5% after chief Elon Musk engaged in a dispute with Bernie Sanders as the U.S. senator demanded the wealthy pay their “fair share” of taxes.

Tesla’s declines follow a steep drop of 15.4% last week after Musk offloaded a combined $6.9 billion worth of shares in the electric-car maker.

Focus this week will be on earnings reports from several major retailers including Walmart Inc, Target Corp, Home Depot Inc and Macy’s Inc. Their results will round off an upbeat third-quarter earnings season, which pushed Wall Street to new highs.

Walmart, which is set to report earnings on Tuesday, fell 0.8%, while the S&P retailers index added 0.7%.

Retail sales data for October is also due on Tuesday, and is expected to show the impact of inflation on consumer spending.

“Inflation is probably going to end up helping (retailers) somewhat because some of these big-box companies are able to … raise prices and maintain pretty close to their margin levels,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

By 1:51 p.m. EST, the Dow Jones Industrial Average rose 23.6 points, or 0.07%, to 36,123.91, the S&P 500 gained 0.02 point, or 0.00%, to 4,682.87 and the Nasdaq Composite dropped 36.73 points, or 0.23%, to 15,824.23.

The S&P materials sector lagged its peers with a 0.5% fall, as signs of weakness in China’s property sector dented major metal miners. The sector is a key driver of global metal demand.

Dollar Tree Inc jumped 14.3% and was the top gainer on the S&P 500 after activist investor Mantle Ridge LP revealed a 5.7% stake in the discount retailer.

(Reporting by Ambar Warrick and Devik Jain in Bengaluru and David French in New York; Editing by Maju Samuel and Matthew Lewis)

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