Weakness in Big Tech pulls stocks slightly lower; yields rise

Stocks are off to a weak start on Wall Street as drops in Big Tech companies outweigh gains in banks and elsewhere. Traders were monitoring another increase in Treasury yields, which tend to hurt richly valued tech companies. At the same time banks benefit from higher yields because they get to charge higher rates on loans. The S&P 500 slipped 0.3% early Tuesday, pulling further below the record high it reached Friday. The Nasdaq lost 0.7%. Markets will be closely watching a speech Wednesday from President Joe Biden outlining details of a $3 trillion infrastructure plan he’s hoping to get passed this summer.

Global shares were mostly higher on Tuesday as investors focused on causes for optimism despite a weak close on Wall Street.

France’s CAC 40 gained 0.6% in early trading to 6,053.59, while Germany’s DAX added nearly 0.7% at 14,914.22. Britain’s FTSE 100 added 0.5% to 6,766.63. U.S. shares were set for a slow start, with the future for the Dow industrials up 0.2% at 33,098.5. S&P 500 futures were little changed, inching down less than 0.1% to 3,958.00.

Japan’s benchmark edged up 0.2% to finish at 29,432.70. Australia’s S&P/ASX 200 lost early gains, falling 0.9% to 6,738.40. South Korea’s Kospi added 1.1% to 3,070.00. Hong Kong’s Hang Seng gained 0.8% to 28,577.50, while the Shanghai Composite rose 0.6% to 3,456.68.

One cause for optimism was the reopening of the Suez Canal, one of the world’s most vital waterways, after a stuck cargo ship was freed. At least 113 of over 420 vessels that had waited for the Ever Given to be freed were expected to cross the canal by Tuesday morning Egypt time.

Fully clearing the backlog of delayed ships is expected to take at least another 10 days.

Shares in Nomura Holdings declined further after a 16.3% plunge on Monday. But they recouped some of their morning losses to end 0.7% lower in Tokyo trading.

On Monday, Nomura and Swiss bank Credit Suisse said they’re facing potentially significant losses because of their dealings with a major client, though the exact magnitude is still unclear. Nomura estimated the claim against its client could be about $2 billion.

Credit Suisse said that it “and a number of other banks” are exiting trades they made with a significant U.S.-based hedge fund, which defaulted on a “margin call” last week. A margin call happens when a broker tells a client to put up cash after it borrowed money to make trades. News reports identified the client as New York-based Archegos Capital Management.

U.S. banks have gotten caught in the downdraft as investors questioned whether the soured trades will be isolated or the effects will expand.

Hopes for economic recovery have been growing as the COVID-19 vaccine rollout moves along in parts of Europe as well as the U.S., with reports the shots are proving effective in preventing serious illnesses. Developing economies were also getting the vaccine.

Japan is an exception, with one of the slowest vaccine rollouts in Asia. Less than 1% of its population has been inoculated, nearly all of them medical workers, has been inoculated so far. The general public might not get the vaccine until the end of the year.

In Japan and elsewhere, worries are also growing about people giving up on social distancing measures too quickly, leading to further waves of infections.

Still, many are betting that a supercharged economic recovery is on the way thanks to COVID-19 vaccinations, immense spending by the U.S. government and continued low interest rates. But that brings worries about rising inflation and possibly too-ebullient prices across the market.

The yield on the 10-year U.S. Treasury rose to 1.76% as of early Tuesday.

Fresh economic reports this week could help show whether stocks deserve the lofty prices they’ve reached. Among the headliners is Friday’s jobs report, which economists expect to reflect a big acceleration in hiring.

On Wednesday, President Joe Biden will also give details about his proposals for rebuilding roads, bridges and other infrastructure. Shares of raw-material producers have rallied recently on expectations of heavier spending on such projects even though many past presidential administrations have failed to make it happen.

In energy trading, benchmark U.S. crude lost 25 cents to $61.31 a barrel in electronic trading on the New York Mercantile Exchange. It gained 59 cents to $61.56. Brent crude, the international standard, fell 17 cents to $64.81 a barrel.

In currency trading, the U.S. dollar rose to 110.25 Japanese yen from 109.82 yen. The euro cost $1.1745, down from $1.1766.