US stock indexes found their footing after a sharp early loss and finished mixed, with technology companies sinking for the third day in a row.
Stocks slumped in morning trading following big declines late last week. Some of the largest losses went to technology companies, including payment and credit card companies.
Indexes in Europe also dropped as Italy vowed to ramp up spending that will increase its deficit.
A sharp increase in bond yields last week had startled investors and prompted them to shift money out of stocks. Bond markets in the US were closed for the Columbus Day holiday and stock trading was relatively light.
Banks, which often rise with interest rates, continued their advance. High-dividend companies, which tend to fall when yields go up, recovered some of their losses from last week.
Kristina Hooper, chief global market strategist for Invesco, said technology companies have dropped because investors are concerned they are vulnerable as the Trump administration wraps up trade negotiations with Mexico, Canada and Korea and zeroes in on China.
“The US has made very significant concessions (to those countries), and I expect them to do that with Japan as well,” she said. “The ultimate goal is to bring China to its knees.”
The S&P 500 index dipped 1.14 points to 2,884.43, and the Dow Jones Industrial Average reversed an early loss of 223 points and rose 39.73 points, or 0.2%, to 26,486.78.
The Nasdaq composite sank 52.50 points, or 0.7%, to 7,735.95, and the Russell 2000 index slipped 2.60 points, or 0.2%, to 1,629.51. The Nasdaq and Russell are each coming off their worst week since late March.
Among payment technology companies, PayPal slid 3.2% to 80.55 dollars and Mastercard fell 2.3% to 208.26 dollars. Other technology companies also struggled, as Microsoft lost 1.1% to 110.85 dollars.
Alphabet, Google’s parent company, fell 1% to 1,155.92 dollars after it said the profiles of as many as 500,000 Google Plus accounts were exposed by a bug. The company said it is ending Google Plus for consumers.
Ms Hooper said technology companies have been returning big profits this year, so investors have been slow to recognise the harm that could come from the trade spat.
“There’s the potential for China to place an embargo on rare earth metals, which would be very disruptive to some parts of the tech industry,” she said. “Tech is not going to be unscathed in a trade war.”
Italy’s deputy premier vowed to press ahead with a plan to increase spending and the country’s deficit even after the European Commission expressed “serious concern” about the notion.
Italy’s FTSE MIB dropped 2.4% and Italian bond prices dropped, sending yields higher. Germany’s Dax fell 1.4% and the Cac 40 in France sank 1.1%. In Britain, the FTSE 100 fell 1.2%.
The euro sank to 1.1488 dollars from 1.1525.
China’s government injected money into its cooling economy by reducing the level of reserves banks are required to hold, and its central bank told Chinese banks to lend more to entrepreneurs.
Chinese leaders are trying to shore up economic growth that began to cool after Beijing tightened lending controls last year to rein in a debt boom.
Hong Kong’s Hang Seng retreated 1.4% and the Kospi in South Korea fell 0.6%. Japanese markets were closed for a holiday.
Brazil’s main stock index staged its biggest rally in two and a half years, jumping 4.6% for its highest close since May after far-right candidate Jair Bolsonaro led the first round of presidential voting by an unexpectedly wide margin. He is now the favourite in the final election later this month.
With bond markets in the US closed, the yield on the 10-year Treasury note, an important benchmark for mortgages and other types of long-term loans, stayed at 3.22% – the highest in more than seven years.
BB&T gained 1.5% to 9.74 dollars and M&T Banks rose 1.1% to 170.09 dollars.
High-dividend stocks rose on Monday. Those stocks are often treated as an alternative to bonds because of their large payments to shareholders, which are similar to the yields from bonds.
Real estate investment trust Crown Castle International gained 1.4% to 110.27 dollars and Coca-Cola climbed 1.3% to 46.48 dollars.
Benchmark US crude slid 0.1% to 74.29 dollars a barrel in New York and Brent crude, used to price international oils, dropped 0.3% to 83.91 dollars a barrel in London.
Wholesale gasoline rose 0.4% to 2.09 dollars a gallon, heating oil inched up 0.1% to 2.39 dollars a gallon, and natural gas jumped 3.9% to 3.27 dollars per 1,000 cubic feet.
Gold lost 1.4% to 1,188.60 dollars an ounce and silver slipped 2.2% to 14.33 dollars an ounce. Copper rose 0.1% to 2.77 dollars a pound.