US STOCKS-Tech rout set to extend as investors fear rising inflation
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By Medha Singh
May 11 (Reuters) - Wall Street's main indexes were set to open sharply lower on Tuesday, signaling another day of losses for technology-related stocks with lofty valuations on worries over inflation.
The outperformers of 2020, Apple AAPL.O, Facebook Inc FB.O, Amazon.com Inc AMZN.O, Netflix Inc NFLX.O and Google-parent Alphabet Inc GOOGL.O dropped between 1.7% and 2.8% in premarket trading, while Tesla Inc TSLA.O fell nearly 8%.
Since the start of May, the 10-member NYSE FANG+TM index .NYFANG, which includes the core FAANG group of stocks alongside Tesla, Alibaba BABA.N, and Twitter Inc TWTR.N, have shed more than $442 billion in market value as of May 10.
The yield on benchmark U.S. 10-year Treasury note US10YT=RR ticked up to 1.604% ahead of consumer price index report on Wednesday, with investors fearing a strong reading could prompt the Federal Reserve to alter its ultra loose monetary policy. US/
"We've seen a spike in commodity prices, economic data has been very strong and an uptick in rates has really pressured the technology complex," said Dan Eye, head of asset allocation and equity research, Fort Pitt Capital Group.
"If you're valuing a high-growth company based on its earnings ten years out, those earnings into the future are worth a lot less today at higher inflation levels."
In a late session reversal on Monday, inflation jitters drove investors away from growth stocks to cyclicals, which benefit the most as the economy reopens, resulting in the S&P 500 logging its worst day in nearly eight weeks.
At 8:29 a.m. ET, Dow e-minis 1YMcv1 were down 297 points, or 0.86%, S&P 500 e-minis EScv1 were down 53.75 points, or 1.28%, and Nasdaq 100 e-minis NQcv1 were down 265 points, or 1.98%.
Simon Property Group Inc SPG.N fell 3.7% after the U.S. mall operator said it does not expect a return to 2019 occupancy levels until next year or 2023, as it looks to play hardball in rent negotiations with tenants. nL4N2MX450
L Brands Inc LB.N fell 3% after the company said it plans to split itself into two publicly traded companies, Bath & Body Works and Victoria's Secret, after the retailer decided against a sale of the lingerie brand. nL4N2MY35R
Energy stocks including Occidental Petroleum Corp OXY.N, APA Corp APA.O and Chevron Corp CVX.N fell between 1.3% and 4% as oil prices declines sharply. O/R
S&P 500 valuation versus pricehttps://tmsnrt.rs/3bk7Fol
(Reporting by Medha Singh and Sruthi Shankar in Bengaluru, graphics by Caroline Valetkevitch in New York; Editing by Arun Koyyur)