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  • Wall Street closed marginally down on Tuesday as investors offloaded tech-based growth shares while U.S. Treasury yields hit a 14-month high
  • The S&P 500 financials, industrials and consumer discretionary sectors rose, signalling an extension of the recent shift from growth to value stocks
  • Tech stocks — where a low-rate environment is heavily tied to their lofty valuations — are among some of the hardest hit by the rise in yields
  • Yesterday’s performance comes ahead of further anticipated details regarding U.S. President Joe Biden’s infrastructure plan, which could be worth up to US$4 trillion (roughly A$5.25 trillion)
  • The Dow Jones Industrial Average fell 0.31 per cent yesterday, while the S&P 500 lost 0.32 per cent and the Nasdaq Composite dropped 0.11 per cent

Wall Street closed marginally down on Tuesday as investors offloaded tech-based growth shares while U.S. Treasury yields hit a 14-month high.

Meanwhile, the S&P 500 financials, industrials and consumer discretionary sectors rose, signalling an extension of the recent shift from growth to so-called value stocks.

Tech shares managed to curtail some of the losses in the afternoon as Treasury yields retreated from the day’s high, but the S&P technology sector finished one per cent down, representing the biggest drag to the S&P 500.

Tech stocks — where the low-rate environment is heavily tied to their lofty valuations — are among some of the hardest hit by the rise in yields.

“It’s somewhat of a leadership-less market,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

“Investors’ preferences are flipping around here almost on a daily basis, primarily between tech plus and cyclicals.”

“Cyclicals have certainly had the upper hand here for a while, trading off the reopening of the economy,” Ghriskey added.

“Tech plus holds in there because it’s really the promise of the future — it should provide investors with steady growth.”

Yesterday’s performance comes ahead of further anticipated details regarding U.S. President Joe Biden’s infrastructure plan, which could be worth up to US$4 trillion (roughly A$5.25 trillion).

Bets on a swift economic recovery, bolstered by vaccine rollouts and unprecedented stimulus measures, have recently helped the S&P 500 and the Dow hit record closing highs.

Bank stocks have also rebounded as investors took heart from signs that the impact from the fall of a U.S. hedge fund did not ripple out to broader markets.

“For the next day or two, (value stocks) will probably be leaders because we have quarter-end and institutions want to make sure that they have exposure to the names that performed well,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in New York.

The Dow Jones Industrial Average fell 0.31 per cent yesterday, while the S&P 500 lost 0.32 per cent and the Nasdaq Composite dropped 0.11 per cent.

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