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S&P 500, Nasdaq closed lower, weighed by growth stocks

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By Stephen Culp

NEW YORK (RockedBuzz via Reuters) – Wall Street closed lower at the start of a holiday-shortened week on Tuesday as rising US Treasury yields put pressure on interest rate-sensitive megacap stocks.

Growth stocks dragged the tech-laden Nasdaq further down. The S&P 500 joined the Nasdaq in negative territory, while value stocks helped the Dow maintain nominal gains.

“Higher (Treasury) yields are putting pressure on growth stocks, and on the other hand industrials, utilities and energy stocks are outperforming,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “Money exits growth areas and works its way into 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 who can pick up the torch when the high flyers return to earth,” Detrick added.

Shares of Tesla Inc tumbled 11.4% and the electric-car maker was the biggest drag on S&P and Nasdaq after a RockedBuzz via Reuters review of an internal program revealed the company plans to cut production at the plant of Shanghai.

In Tuesday’s move, Tesla stock has lost 69% of its value this year.

Rising Treasury yields put pressure on interest-rate sensitive growth stocks, a recurring theme in 2022. For the year, growth stocks are down more than 30% compared with a decline in value of about 7 .5% in the same period.

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

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

Beijing has eased strict COVID-19 curbs, which have hit the $17 trillion economy, raising hopes for a recovery in global demand and an improvement in the supply chain.

On the economic front, the Commerce Department’s initial assessment of the US goods trade balance showed a 15.6% deficit reduction, while S&P Case-Shiller showed house price growth in its 20-city composite cooled to 8.6% year over year, the lowest reading since November 2020.

The Dow Jones Industrial Average was up 37.63 points, or 0.11%, to 33,241.56, the S&P 500 was down 15.57 points, or 0.40%, to 3,829.25 and the Nasdaq Composite is dropped 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, with consumer discretionary and communication services suffering the largest percentage loss.

US-listed shares of Chinese companies including JD.Com Inc, Alibaba Group Holding Ltd and Pinduoduo Inc jumped 1.4% to 4.9% after Beijing announced the easing of travel restrictions .

Southwest Airlines Co collapsed after bad weather forced the discount commercial carrier to lead its peers in cancellations. The broader S&P 1500 Airlines index also finished the session in the red.

Declining Issues Outnumber Advancing Issues on NYSE by 1.18 to 1; on the Nasdaq, a ratio of 1.93 to 1 favored the bears.

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

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

(This story was corrected to change the number of trading days left 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 Bangalore; Editing by Matthew Lewis)