Led by the U.S., the rally in stocks showed no sign of cooling off last week, but the bond market hit some turbulence as short-term yields hit their highest levels since the global financial crisis and long-term rates moved to 10-month highs.
Stock prices were mostly lower on Monday, with the Dow Jones Industrials losing 26 points or 0.2% today, the first negative Monday for stocks since the third week of July. The S&P 500 lost 0.3% or roughly twice the Dow’s Monday decline, while the NASDAQ Composite and the Russell 2000 small-cap stock index were outliers with 0.2% gains on the day. Declining stocks outnumbered advancing stocks by a 19 to 12 margin, although in the small-cap space there were generally more winners than losers Monday (S&P 600 SmallCaps: 321 up; 270 down; 9 unchanged).
Stock prices fell for a second day on Tuesday, a little more resolutely than Monday’s retreat. The Dow lost 118 points or 0.7%, falling to 16907 after two sessions in the rarefied air above 17000. The S&P 500 matched the Dow’s 0.7% decline, while the NASDAQ Composite nearly doubled it, losing 1.3%. As was the case on Monday, small-cap stocks tended to lose more, while biotech and internet indexes fell 2%-3%. Investors sold social media stocks with a vengeance; Facebook lost almost 4%, and Twitter, LinkedIn and Pandora were all down at least 6%.