Big tech slide leaves indexes lower on day
A late burst of selling on Wall Street erased an early gain for stocks Wednesday, pulling the market further below the all-time high it reached just a week ago.
The S&P 500 dropped 0.5% after having been up 0.8% in the early going. Technology and communication services companies accounted for the heaviest selling, outweighing gains in financial, energy and industrial stocks. Bond yields mostly fell after rising earlier this week.
"The markets are kind of choppy and sideways and everything is sort of trying to figure out who's in charge, where's the equilibrium - and it creates uncertainty," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. "When people don't know what to do, they either do nothing or they sell. They very rarely buy."
The S&P 500 fell 21.38 points to 3,889.14. The benchmark index is on track for its second straight weekly decline. The Dow Jones Industrial Average slipped 3.09 points, or less than 0.1%, to 32,420.06, after a 364-point gain vanished by late afternoon. The Nasdaq slid 265.81 points, or 2%, to 12,961.89.
Smaller company stocks fared worse than the broader market. The Russell 2000 index lost 51.42 points, or 2.4%, to 2,134.27.
Investors had their eye on Washington, where Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen spoke before the Senate about the government's efforts to combat the economic impact of the coronavirus pandemic. The Biden administration is considering up to $3 trillion in additional spending on infrastructure, green energy, and education.
Yellen believes the U.S. government has more room to borrow, but said higher taxes would likely be required in the long run to finance future spending increases. Meanwhile, Powell reiterated that the recent jump in the yield on the 10-year Treasury, which soared from less than 1% at the beginning of the year to 1.62% Wednesday, was mostly a sign of confidence among investors that the economy is improving.
Bond yields have risen this year as traders have been watching the potential for inflation pressures to pick up after struggling economies were flooded with credit and government spending. That has depressed U.S. bond prices, prompting some to shift money out of stocks.
Technology and communication stocks dragged the market lower. Apple fell 2%, while Facebook lost 2.9%.
Bank stocks, which took a beating on Tuesday, were among the best performers. Banks have been volatile the last couple of weeks as investors try to gauge the impact of higher interest rates on the U.S. economy. Higher interest rates can slow economic momentum, but they also allow banks to charge more for loans. JPMorgan Chase added 0.8%.
Tesla to begin accepting Bitcoin on car payments
Having stunned the market with its audacious bet on Bitcoin earlier this year, Tesla will now start accepting the world's largest electronic currency as payment for its electric cars.
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Chief Executive Officer Elon Musk on Wednesday tweeted that "you can now buy a Tesla with Bitcoin" and that paying by Bitcoin will also be available to customers outside the U.S. later this year. He added that Tesla will only use internal and open-source software and that any Bitcoin paid to the company will be retained as Bitcoin and not converted to a fiat currency. All vehicles will be priced in dollars.
Palo Alto-based Tesla disclosed its $1.5 billion investment in Bitcoin in February and said it intended to begin accepting the cryptocurrency as a form of payment, sending prices to a record. The world's leading EV maker made the Bitcoin bet after updating its investment policy in January to allow it to buy digital assets.
Bitcoin climbed as high as 5.1% to $57,204. The token has fluctuated wildly after hitting a record $61,742 on March 13. Tesla shares dropped 4.6% to $631.83 as of 3:40 p.m. in New York, and are up more than 500% in the past year.
Compiled from Associated Press and Bloomberg reports.