As investors waited for Fed Chairman Jerome Powell’s testimony on economic health in Congress, the US stock market fell slightly on Tuesday.
Futures linked to the Standard & Poor’s 500 Index fell 0.1%. The benchmark stock index fell for the fifth consecutive day on Monday, the longest decline since February last year. The Nasdaq-100 index fell 0.6%, suggesting that technology stocks will continue to lead the market.
In recent days, the yields of US government bonds have risen sharply, eroding investors’ appetite for high-risk assets, including stocks. For most of the past year, the stocks of technology companies driving the market’s gains were seen as particularly vulnerable. This is because the valuation of many technology companies is related to their future profit potential. When investors use a higher discount rate, the value of these profits decreases at today̵
Paul Jackson, the global head of Invesco Asset Allocation Research, said that the rise in bond yields “naturally did arouse investors and caused the market to re-examine the perception of stocks.” He said that in the past few months. Investing in government bonds for the first time seems to be more attractive.
Jackson added: “However, the level at which bond yields are truly problematic for stocks is still a long way from us.”