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Banks and energy stocks pull major U.S. indexes mostly lower

BEIJING — Banks and energy stocks are leading major U.S. indexes mostly lower in the early going on Wall Street, while gains for some Big Tech companies like Microsoft nudged the Nasdaq slightly higher.

The S&P 500 index fell 0.1% in the first few minutes of trading Tuesday. Another drop in long-term bond yields was pulling bank stocks lower. Lower yields mean lower interest rates on loans such as mortgages, and weaker profits for banks. Energy companies were following the price of crude oil lower. Benchmark U.S. crude dropped nearly 4% in early trading, but it’s still up 75% over the past year.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

BEIJING (AP) — Global stocks and Wall Street futures declined Tuesday after the Federal Reserve promised to support the U.S. economy and Washington and Europe announced sanctions against Chinese officials accused of human rights abuses.

London and Frankfurt opened lower, while Shanghai, Tokyo and Hong Kong closed down.

Overnight, Wall Street’s benchmark S&P 500 index rose 0.7% as big technology companies led stocks broadly higher. Amazon, Apple, and Microsoft advanced.

Fed Chairman Jerome Powell said while the economy was improving, a recovery is “far from complete.” In testimony to Congress, he said the Fed “will continue to provide the economy the support it needs for as long as it takes.”

Powell “kept markets happy” by saying “there was still a long way to go” before tighter monetary policy is justified, Robert Carnell of ING said in a report.

In early trading, the FTSE 100 in London lost 0.5% to 6,690.61 while Frankfurt’s DAX shed 0.7% to 14,558.96. The CAC 40 in Paris retreated 0.5% to 5,938.03.

On Wall Street, the future for the S&P 500 index was off 0.4% and that for the Dow Jones Industrial Average was down 0.3%. On Monday, the Dow advanced 0.3% and the tech-heavy Nasdaq climbed 1.2%.

Shares were boosted by a rise in bond prices, which narrowed their yield, or the difference between their market price and the payout at maturity. A rise in yields has been luring investors out of higher-priced tech stocks.

In Asia on Tuesday, the Shanghai Composite Index lost 0.9% to 3,411.51 after the United States, the European Union, Britain and Canada announced sanctions against four Chinese officials accused of abusing ethnic minorities in the country’s northwest.

Beijing retaliated by saying it would impose unspecified penalties on four European legislators, a German researcher, a think-tank and other entities.

The Nikkei 225 in Tokyo lost 0.6% to 28,995.92.

The Hang Seng in Hong Kong fell 1.4% to 28,494.09. Chinese search engine operator Baidu Inc. closed unchanged on its first trading day after the company joined the Hong Kong exchange and raised $3.1 billion in a share sale.

The Kospi in Seoul shed 1% to 3,004.74 while Sydney’s S&P-ASX 200 lost 0.1% to 6,745.40.

India’s Sensex gained 0.4% to 49,977.22. New Zealand and Singapore advanced while Jakarta declined.

Investors are wavering between optimism that coronavirus vaccines that might allow business and travel to return to normal and fears of higher inflation after struggling economies were flooded with credit and government spending.

They have been reassured by Powell’s comment earlier that the Fed’s key interest rate will be kept near zero through 2023 even as inflation is forecast to pick up.

The yield on the 10-year Treasury note narrowed to 1.65% after trading as high as 1.74% last week. The possibility of higher interest rates as yields rise has some investors concerned economic growth might slow.

In energy markets, benchmark U.S. crude lost 77 cents to $60.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 13 cents on Monday to $61.55. Brent crude, the price basis for international oils, retreated 77 cents to $63.85 per barrel in London. It rose 9 cents the pervious session to $64.62 a barrel.

The dollar edged down to 108.78 yen from Monday’s 108.80 yen. The euro retreated to $1.1888 from $1.1942.

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