US stocks fall as tech slides and treasury yields drop ahead of inflation data

NEW YORK, Feb 12 (Reuters) – Major stock indexes fell sharply on Thursday as technology shares slid and investors were cautious ahead of U.S. inflation data on Friday, while U.S. Treasury yields also dropped.

The Nasdaq ended more than 2% lower, leading losses on Wall Street. The technology sector slipped 2.7% and was the S&P 500’s biggest weight, while more defensive sectors including utilities ended higher.

Investor confidence has been shaken this month by a series of selloffs in sectors such as software amid concern over artificial intelligence’s potential to disrupt certain industries.

“You still have this anti-AI trade going on … valuations have come down, but I do think that is part of the issue here and continues to plague the market,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. Also, “there is this defensive rotation going,” he said.

A surprisingly strong U.S. jobs report on Wednesday eroded near-term rate cut expectations from the Federal Reserve. On Thursday, data showed new applications for U.S. unemployment benefits decreased by less than expected last week.

Expectations the U.S. central bank could have the leeway to cut interest rates had been creeping higher until Wednesday’s jobs report.

Investors have been digesting this week’s data and weighing the Fed’s next steps. The U.S. consumer price index (CPI), set to be released on Friday, is the next key data point.

Treasury yields extended their declines after a robust auction of 30-year bonds. The yield on the benchmark U.S. 10-year Treasury note tumbled 8.1 basis points, its biggest drop since October 10, to 4.102% and is on track for its fifth drop in the past six sessions.

The Dow Jones Industrial Average fell 669.42 points, or 1.34%, to 49,451.98, the S&P 500 fell 108.71 points, or 1.57%, to 6,832.76 and the Nasdaq Composite fell 469.32 points, or 2.03%, to 22,597.15.

An index of world stocks was sharply lower after hitting record highs this week. MSCI’s gauge of stocks across the globe fell 10.35 points, or 0.98%, to 1,045.22.

The pan-European STOXX 600 index finished 0.5% lower at 618.52 points, with most regional benchmarks also reversing course to close in negative territory.

In currencies, the dollar index was little changed. The index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.04% to 96.95, with the euro down 0.03% at $1.1866. Against the Japanese yen, the dollar weakened 0.23% to 152.91.

The yen has rallied as investors have warmed to the view that the new government in Japan will be fiscally responsible and that Japan’s finances may be favorable in the long run.

Oil prices dropped due to falling demand, easing concerns over renewed Middle East conflict and expected increases in supply. U.S. crude fell $1.79 to settle at $62.84 a barrel and Brent dropped $1.88 to settle at $67.52.

Gold prices fell to a near one-week low, with spot gold last down about 2.8% at $4,934.57 an ounce.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Amanda Cooper in London, Chuck Mikolajczak in New York, and Ankur Banerjee in Singapore; Editing by Bernadette Baum, Kirsten Donovan, Nick Zieminski and Edmund Klamann)