The week in markets: technology shares slide 8.2% as major indices fall

US equities fell across the board in the week to November 6, though not evenly. The S&P 500 fell 2.7%, the Nasdaq 100 fell 4.9%, the Dow Jones Industrial Average fell 0.9% and the Russell 2000 fell 2.1%. The gap between the best and worst-performing of the four major indices was wide: the Dow's 0.9% decline was the smallest, the Nasdaq 100's 4.9% decline the largest, with the two broader gauges, the S&P 500 and the Russell 2000, falling by amounts in between.

Equities and sectors

The index-level declines reflect a sharper split underneath. Technology shares fell 8.2% and energy shares fell 12.0%, the two steepest sector moves of the week. Financials rose 1.2% and consumer discretionary stocks rose 1.9%, moving in the opposite direction to the broader market, while health care was little changed, falling 0.04%. Financials rose for the week even as Treasury yields climbed on both ends of the curve; the data available does not establish whether the two moves were connected.

Energy's 12.0% weekly decline was not matched by a comparable move in the underlying commodity. A year earlier WTI stood at $61.79, so crude remains far higher than it was twelve months ago even after energy shares' sharp fall this week. Nothing in the available data links the size of the equity move to the smaller move in the oil price itself.

Rates and the dollar

Treasury yields rose at both ends of the curve. The 2-year yield rose to 4.61% on November 3, from 4.59% the previous session, and stands well above the 3.6% recorded a year earlier. The 10-year yield rose to 4.95%, from 4.91%, compared with 4.13% a year ago. The 10-year/2-year spread narrowed to 0.32 percentage points on November 4, from 0.34 the day before, continuing a narrowing trend from the 0.52 percentage points recorded a year earlier.

The trade-weighted dollar index was little changed, at 121.666 on October 30 against 121.736 the previous session, and close to the 121.283 level recorded a year earlier. The dollar's near-flat reading sits alongside yields that have risen markedly over the past twelve months on both the short and long end of the curve.

The labour market

That reading sits apart from the week's equity declines: the labour market, as measured by claims, has shown no comparable strain.

The week ahead

It will be the next scheduled data point measured against a backdrop in which both the 2-year and 10-year Treasury yields have risen over the past year, the yield curve has continued to narrow from a year ago, and jobless claims have fallen over the same period.