NEW YORK (Reuters) - Wall Street’s three major indexes declined on Thursday as tobacco stocks led a tumble in consumer staples and concerns about smartphone demand hurt the technology sector while rising bond yields and earnings helped financials rebound.
Cigarette giant Philip Morris International Inc (PM.N) was the biggest drag on the S&P after weaker than expected results, which also pulled down Altria (MO.N).
A warning from Taiwan Semiconductor (TSMC) (2330.TW), the world’s largest contract chipmaker and an Apple Inc (AAPL.O) supplier, on soft demand for smartphones and on the industry’s growth this year sparked a tumble in chip stocks and made Apple the S&P’s second biggest weight.
Along with weak results from Philip Morris and Procter & Gamble, defensive sectors such as consumer staples .SPLRCS were also hurt by a rise in U.S. 10-year Treasury yields, which helped bank stocks.
“It’s an obsession with high interest rates right now,” said Richard Sichel, senior investment strategist at The Philadelphia Trust Company. “The sectors really tell the story. Financials are up because they do better in a higher rate environment.”
When yields are high, investors favor bonds over defensive sectors such as consumer staples and real estate, which promise high dividends and slow growth. But banks benefit as high interest rates can boost their profits.
At 2:57 p.m. ET, the Dow Jones Industrial Average .DJI fell 118.81 points, or 0.48 percent,
