U.S. Stocks Turn Lower, Led by Tech Shares

Stocks have had a turbulent start to the year, amplified in recent days by extreme moves in big tech stocks. Last week saw a record-breaking decline in Meta Platforms shares and the biggest rise since 2015 for Amazon.com shares, after the companies posted earnings. Friday’s better-than-expected jobs report also turned traders’ attention back to central-bank policy, which is set to tighten as the economy continues to recover.   

Shares of Meta and

Netflix

dropped Monday, losing 5.5% and 3.5%, respectively, weighing on the broader market. Amazon continued to rise, adding 0.8%. The moves continue a recent divergence in so-called FAANG names that have led investors to shift how they trade the hot tech group.

In corporate news, Peloton jumped 14% after The Wall Street Journal reported that the stationary-bike company was drawing interest from Amazon and other potential suitors.

Spirit Airlines

added 15% after it said it was merging with Frontier Group.

Tyson Foods

climbed 11% after it said it expected its sales for the year to be at the upper end of its guidance.

Hasbro

slipped 0.4% after reporting revenue and profit that beat Wall Street’s estimates.

The yield on the benchmark 10-year Treasury note hovered at 1.927% Monday, from 1.930% Friday.

“Markets have been repricing, as seen in the move up in yields, but I think we’re arriving at a point where it’s difficult to price in a much more hawkish outlook than we have today. We could now see a bit of stabilization,” said

Esty Dwek,

chief investment officer at FlowBank.

Yields remain at elevated levels, which is likely to make investors nervous, said

Gregory Perdon,

chief investment officer at

Arbuthnot Latham.

Growth stocks in particular can get hit from higher yields as their present value is largely determined by growth expectations, which shrinks when calculated with a higher interest rate. 

Companies scheduled to post results this week include

Pfizer

and

KKR

on Tuesday and Uber Technologies and Walt Disney on Wednesday.

Coca-Cola,

PepsiCo

and

Twitter

are slated for Thursday. 

“Earnings have been very good, broadly speaking. We’re seeing that the consumer remains quite strong and the reopening companies are doing better than the stay-at-home ones,” Ms. Dwek said. “Investors are trying to look past the pandemic.”

But it’s been hard to impress investors this earnings season. Companies that are beating estimates are performing worse than they had historically, while those that are missing estimates are being punished, wrote

JPMorgan Chase & Co.

strategists in a note to clients on Monday.

This is one of several signs that investors have grown overly bearish in recent weeks, wrote JPMorgan’s Marko Kolanovic in the note.

“As overly bearish sentiment clears, we expect the market to lift,” Mr. Kolanovic said.

Cryptocurrencies gained Monday, with bitcoin rising 5% from its level at 5 p.m. ET on Friday. It traded around $42,800. The digital currency rose above $40,000 Friday after spending two weeks below that level and maintained it through the weekend and into Monday. 

Overseas, the pan-continental Stoxx Europe 600 added 0.7%. European government bond yields extended last week’s gains as markets continued to price in hawkish signals from the European Central Bank’s press conference on Thursday. Benchmark 10-year Italian and Greek bond yields rose to the highest levels since spring 2020.

In Asia, major benchmarks were mixed. The Shanghai Composite Index climbed 2%, reopening after China’s New Year holiday week, despite a private gauge of China’s services sector slipping to a five-month low. The advances in Chinese onshore stocks were a catch-up trade, following last week’s rally in U.S. stocks, said Patrick Ru, a portfolio manager on Neuberger Berman Group’s global equity team. 

Hong Kong’s Hang Seng Index closed flat and Japan’s Nikkei 225 declined 0.7%. 

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Gunjan Banerji at gunjan.banerji@wsj.com