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S&P 500, Nasdaq close lower, weighed by gains in stocks


  • Tesla collapses on reduced production plan
  • Southwest Airlines is reducing holiday flight cancellations
  • China ADRs rise on renewed optimism
  • Indexes: Dow up 0.11%, S&P down 0.40%, Nasdaq down 1.38%

NEW YORK, Dec 27 (Reuters) – Wall Street ended lower at the start of the holiday-shortened week on Tuesday as rising U.S. Treasury yields pressured interest-sensitive megacap stocks.

Stocks for growth (.IGX) dragged down the tech-heavy Nasdaq the most. The S&P 500 joined the Nasdaq in negative territory, while value stocks helped the Dow hold on to nominal gains.

“Higher (Treasury) yields are putting pressure on growth stocks, and on the other hand, industrials, utilities and energy are outperforming,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Neb. “Money is flowing out of growth areas and making its way to the value side of things, which is a microcosm of what we’ve seen all year.”

“It’s important to remember that there are other groups that can pick up the baton when the high flyers come back down to earth,” Detrick added.

Shares of Tesla Inc (TSLA.O) tumbled 11.4% and the electric car maker was the biggest drag on the S&P and Nasdaq after a Reuters review of an internal schedule revealed the company plans to cut production at its Shanghai plant.

With Tuesday’s move, Tesla shares have lost 69% of their value this year.

Rising government bond yields are putting interest-sensitive growth stocks under pressure, a recurring theme in 2022. For the year, growth stocks have tumbled more than 30%, compared with a decline of about 7.5% over the same period .

With just three trading days left in 2022, all three indexes are on track to post their biggest annual loss since 2008, the nadir of the global financial crisis.

“It’s been a bad year for stocks, but a worse year for bonds. That’s extremely rare,” Detrick said. “It’s an unpleasant reminder that markets can sometimes surprise.”

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 7, 2022. REUTERS/Brendan McDermid

Beijing relieved its strict COVID-19 restrictions that have hit the $17 trillion economy, fueling hopes of a revival in global demand and supply chain improvements.

On the economic front, the Commerce Department’s initial estimate of the U.S. merchandise trade balance showed the deficit narrowing 15.6 percent, while S&P Case-Shiller showed that home price growth in the 20-city composite cooled up 8.6% year-on-year, the lowest reading since November 2020.

The Dow Jones Industrial Average (.DJI) rose 37.63 points, or 0.11%, to 33,241.56, the S&P 500 (.SPX) lost 15.57 points, or 0.40%, to 3,829.25 and the Nasdaq Composite (.IXIC) fell 144.64 points, or 1.38%, to 10,353.23.

Of the 11 major sectors in the S&P 500, six ended the session in the red, as consumer discretionary (.SPLRCD) and communication services (.SPLRCL) suffering the greatest percentage loss.

US-listed shares of Chinese firms including JD.Com Inc, Alibaba Group Holding Ltd and Pinduoduo Inc (PDD.O) jumped between 1.4% and 4.9% after Beijing announced it was easing travel restrictions.

Southwest Airlines Co (LUV.N) fell after bad weather forced the discount commercial carrier to lead its peers cancellations. The broader S&P 1500 Airlines Index also ended the session in the red.

Falling issues outnumber rising ones on the NYSE by a ratio of 1.18 to 1; on the Nasdaq, a ratio of 1.93 to 1 favored the decliners.

S&P 500 posts 9 new 52-week highs and 3 new lows; The Nasdaq Composite recorded 96 new highs and 448 new lows.

Volume on US exchanges was 8.35 billion shares, compared to the full session average of 11.35 billion over the past 20 trading days.

(This story has been corrected to change the number of trading days remaining this year to three instead of four in paragraph 8)

Reporting by Stephen Culp in New York Additional reporting by Amruta Khandekar and Ankika Biswas in Bengaluru Editing by Matthew Lewis

Our standards: Thomson Reuters Trust Principles.


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