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GLOBAL MARKETS-Tech stocks sink Wall Street; U.S. bonds rally
April 10, 2014 / 6:40 PM / in 4 years

GLOBAL MARKETS-Tech stocks sink Wall Street; U.S. bonds rally

* Nasdaq losses top 2 percent; Dow, S&P down more than 1 percent

* U.S. jobless claims report unexpectedly strong

* Dollar gets little lift from jobs data

* Greece makes successful return to bond markets (Adds widening Wall Street declines, price updates)

By Michael Connor

NEW YORK, April 10 (Reuters) - U.S. technology stocks slumped on Thursday, resuming recent weakness in shares which had previously led U.S. stocks higher for more than a year, while Greece’s much-heralded return to the bond market buoyed euro zone debt.

The yield on the benchmark 10-year U.S. Treasury note fell to its lowest since the beginning of March as investors shifted out of equities into safe-haven government debt.

Technology and biotech shares led the way lower, as investors continue to question whether high-flying momentum stocks such as TripAdvisor are overvalued. The Nasdaq index, which is heavily composed of technology company shares, fell nearly 3 percent.

European equity markets, which started the day stronger, fell in tandem with Wall Street.

The equity market dropped even after the Labor Department reported that U.S. weekly jobless claims fell to a seven-year low, indicating ongoing recovery in the labor market and the economy.

“The rotation is out of some of the higher-growth, higher-momentum areas of the market, and until we get earnings visibility, we could see protracted weakness,” said Eric Teal, chief investment officer at First Citizens Bancshares Inc in Raleigh, North Carolina, which manages $3.5 billion.

On Wednesday, U.S. stocks bounced after dovish commentary from the Federal Reserve’s minutes from its March meeting. That helped shares in Asia rally overnight and bolstered European equities for a time.

Wall Street’s Dow Jones industrial average fell 178 points or 1.08 percent, to 16,260.28, the S&P 500 lost 25.82 points or 1.37 percent, to 1,846.46 and the Nasdaq Composite dropped 101.2 points or 2.4 percent, to 4,083.20.

The S&P technology sector fell 2.1 percent, while the Nasdaq biotechnology index plunged 5.4 percent.

Greece staged a triumphant return to the bond market just two years after its default placed it at the center of the euro zone debt crisis.

Greece drew solid demand at its five-year bond sale, which aimed to raise three billion euros and offered a yield of 4.95 percent, beating Athens’ 5 percent target. It had been expected to draw in U.S. investors including hedge funds.

Greece’s deputy prime minister, Evangelos Venizelos, said the sale was at least eight times oversubscribed. Investors looked to the deal as further evidence that the euro zone’s economic recovery is gathering pace.

“It’s not a particularly cheap deal for them, but they are on the right track and it shows the debt crisis has eased significantly,” said Commerzbank strategist Michael Leister.

The global MSCI All-Country World index was down 0.7 percent. The FTSEurofirst 300 index of leading European companies lost 0.5 percent, shedding earlier gains.

European shares felt the sting of weak economic data, with Italy reporting softer-than-expected industrial output while a discounted share placement by Iberdrola triggered a selloff in Spanish utilities.

U.S. Treasuries rallied on the weakness in stocks. The benchmark 10-year Treasury note rose 17/32 to drop its yield to 2.623 percent, while the 30-year bond was little changed at 3.511 percent.

The Federal Reserve on Thursday bought $3.223 billion of Treasuries maturing June 2018 through December 2018 as part of its economic stimulus program.

Initial U.S. jobless claims declined by 32,000 to a seasonally adjusted 300,000 for the week ended April 5.

“It’s collaborating with the other signals we have been seeing, which is the jobs market is slowly improving,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The Fed minutes took a toll on the dollar on Thursday, sending the greenback to lows against the yen and the Swiss franc not seen in weeks, as investors who had positioned for a gradual tightening in monetary policy reversed course.

The dollar has fallen versus the yen in four of the last five trading days and on Thursday neared a four-week low . Against the Swiss franc, the dollar weakened for a fourth straight session and stood at a low last seen on March 19.

“The minutes were laced with dovish undertones,” said Scott Smith, senior FX trader and market analyst, at Cambridge Mercantile Group in Calgary, sending “market participants into a ‘risk-on’ buying frenzy.”

The dollar was down 0.3 percent versus the yen at 101.64 yen, having fallen to 101.39, its lowest since March 19. The dollar slipped against the Swiss franc to 0.8768 franc, its lowest in three weeks.

A drop in China’s exports stoked concerns about demand in the world’s second-biggest economy and pushed the price of oil down toward $107 a barrel. OPEC also lowered its 2014 forecast for oil demand.

Brent crude fell 55 cents to $107.43 a barrel, after gaining $2.16 over the previous two days.

Gold hit a 2-1/2-week high as the dollar dropped. Spot gold hit its highest since March 24 at $1,324.40 an ounce before easing to $1320.20, a gain for the day of 0.55 percent. (Reporting by Michael Connor in New York; Additional reporting by Sudip Kar-Gupta in London and Gertrude Chavez-Dreyfuss, Ryan Vlastelica, Chuck Mikolajczak and Richard Leong in New York; Editing by Leslie Adler and James Dalgleish)

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