New York: Technology companies lead broad selloff wall Street Bond yields jumped on Tuesday amid fresh shocks that the Federal Reserve will act more aggressively than expected to tackle rising inflation.
The S&P 500 fell 1.8%, with nearly 90% of the stocks in the benchmark index closing in the red. The Nasdaq, which is heavily weighted with technology stocks, dropped 2.6%. Dow Jones The industrial average fell 1.5%.
Losses in major indices this month due to rising inflation and the latest surge in the virus pandemic have caused investors to exercise caution.
Higher expectations of a rate hike from the Fed have pushed up Treasury yields. The 10-year Treasury hit 1.87% on Tuesday, the highest since January 2020. It was 1.77% late on Friday.
Investors are now pricing in a better than 86% likelihood that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw a less than 47% chance of it, according to CME Group.
“The 10-year yield continues to be “pricing, higher pricing at the more and more aggressive Federal Reserve,” said Ross Mayfield, investment strategy analyst at Baird. Hadn’t seen the speculation, and now you’re starting to hear that nonsense.”
The S&P 500 fell 85.74 points to 4,577.11, the Dow fell 543.34 points to 35,368.47 and the Nasdaq fell 386.86 points to 14,506.90. The indices all hit a new low for the year. The Nasdaq has borne the brunt of the loss, falling 7.3% this month. This puts the index within the 2.7% correction, Wall Street—when a stock or index falls 10% or more from its last peak. The S&P 500 is down nearly 4% for the month after setting an all-time high on the first trading day of the year.
The latest wave of selling comes as Wall Street tries to predict how much the Fed will raise interest rates, and how rapidly. The central bank has intensified its plan to reduce bond purchases and is considering raising interest rates more frequently than Wall Street expected.
The Fed is under pressure to reduce inflation, which last month jumped at its fastest pace in nearly 40 years. At the same time, the job market has bounced back from last year’s brief but sharp coronavirus slowdown, leaving the unemployment rate at a pandemic low of 3.9% last month, providing further leeway to rein in unprecedented support to the central bank. What this economy is providing. Ever since the pandemic came.
While higher rates could help stave off high inflation world-wide, they would also eliminate conditions that have put financial markets in “easing mode” for many investors since the start of 2020.
Higher rates make stocks in high-flying tech companies and other expensive growth stocks less attractive. Big technology stocks, which have a major impact on the S&P 500 due to their high valuations, have weighed heavily on the market this year as investors move money in anticipation of higher rates.
The sector was the biggest drag on the S&P Tuesday. Apple fell 1.9% and chipmaker Nvidia 3.9%.
Banks also weighed heavily on the market after Goldman Sachs said fourth-quarter profit fell 13% compared to a year ago, mainly because Goldman is offering hefty pay packages to employees. Goldman’s results were similar to results for JPMorgan and Wells Fargo last week, which also marked lower profits and higher expenses due to increased employee compensation costs.
Shares of Goldman fell 7%, while shares of JPMorgan lost 4.2%. Wells Fargo was down 2.4%.
Small company shares also lost ground, a measure of confidence in economic growth. The Russell 2000 Index fell 66.23 points, or 3.1%, to 2,096.23.
Energy futures rose broadly amid supply fears following an attack on an oil plant in the UAE capital. US crude oil prices rose 1.9% to $85.43 a barrel, a 7-year high. A rally in oil prices boosted some energy stocks. Exxon Mobil rose 1.7%.
Investors returning after US markets closed on Monday for the Martin Luther King Jr. Day holiday also reviewed the latest batch of corporate earnings and deal news on Tuesday.
Activision blizzard Up 25.9% on news of a blockbuster deal. Microsoft, which fell 2.4%, is buying the maker of games like “Call of Duty” and “Candy Crush” for $68.7 billion.
Investors have had a busy week ahead of earnings reports. The main focus will be on how companies are handling supply chain issues in various industries. Many companies have already warned about the impact on their finances and operations, despite this being done to offset the impact of price increases on consumer goods.
On Wednesday, Bank of America, UnitedHealth and United Airlines reported results. American Airlines, Union Pacific and Netflix reported their results on Thursday.
The S&P 500 fell 1.8%, with nearly 90% of the stocks in the benchmark index closing in the red. The Nasdaq, which is heavily weighted with technology stocks, dropped 2.6%. Dow Jones The industrial average fell 1.5%.
Losses in major indices this month due to rising inflation and the latest surge in the virus pandemic have caused investors to exercise caution.
Higher expectations of a rate hike from the Fed have pushed up Treasury yields. The 10-year Treasury hit 1.87% on Tuesday, the highest since January 2020. It was 1.77% late on Friday.
Investors are now pricing in a better than 86% likelihood that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw a less than 47% chance of it, according to CME Group.
“The 10-year yield continues to be “pricing, higher pricing at the more and more aggressive Federal Reserve,” said Ross Mayfield, investment strategy analyst at Baird. Hadn’t seen the speculation, and now you’re starting to hear that nonsense.”
The S&P 500 fell 85.74 points to 4,577.11, the Dow fell 543.34 points to 35,368.47 and the Nasdaq fell 386.86 points to 14,506.90. The indices all hit a new low for the year. The Nasdaq has borne the brunt of the loss, falling 7.3% this month. This puts the index within the 2.7% correction, Wall Street—when a stock or index falls 10% or more from its last peak. The S&P 500 is down nearly 4% for the month after setting an all-time high on the first trading day of the year.
The latest wave of selling comes as Wall Street tries to predict how much the Fed will raise interest rates, and how rapidly. The central bank has intensified its plan to reduce bond purchases and is considering raising interest rates more frequently than Wall Street expected.
The Fed is under pressure to reduce inflation, which last month jumped at its fastest pace in nearly 40 years. At the same time, the job market has bounced back from last year’s brief but sharp coronavirus slowdown, leaving the unemployment rate at a pandemic low of 3.9% last month, providing further leeway to rein in unprecedented support to the central bank. What this economy is providing. Ever since the pandemic came.
While higher rates could help stave off high inflation world-wide, they would also eliminate conditions that have put financial markets in “easing mode” for many investors since the start of 2020.
Higher rates make stocks in high-flying tech companies and other expensive growth stocks less attractive. Big technology stocks, which have a major impact on the S&P 500 due to their high valuations, have weighed heavily on the market this year as investors move money in anticipation of higher rates.
The sector was the biggest drag on the S&P Tuesday. Apple fell 1.9% and chipmaker Nvidia 3.9%.
Banks also weighed heavily on the market after Goldman Sachs said fourth-quarter profit fell 13% compared to a year ago, mainly because Goldman is offering hefty pay packages to employees. Goldman’s results were similar to results for JPMorgan and Wells Fargo last week, which also marked lower profits and higher expenses due to increased employee compensation costs.
Shares of Goldman fell 7%, while shares of JPMorgan lost 4.2%. Wells Fargo was down 2.4%.
Small company shares also lost ground, a measure of confidence in economic growth. The Russell 2000 Index fell 66.23 points, or 3.1%, to 2,096.23.
Energy futures rose broadly amid supply fears following an attack on an oil plant in the UAE capital. US crude oil prices rose 1.9% to $85.43 a barrel, a 7-year high. A rally in oil prices boosted some energy stocks. Exxon Mobil rose 1.7%.
Investors returning after US markets closed on Monday for the Martin Luther King Jr. Day holiday also reviewed the latest batch of corporate earnings and deal news on Tuesday.
Activision blizzard Up 25.9% on news of a blockbuster deal. Microsoft, which fell 2.4%, is buying the maker of games like “Call of Duty” and “Candy Crush” for $68.7 billion.
Investors have had a busy week ahead of earnings reports. The main focus will be on how companies are handling supply chain issues in various industries. Many companies have already warned about the impact on their finances and operations, despite this being done to offset the impact of price increases on consumer goods.
On Wednesday, Bank of America, UnitedHealth and United Airlines reported results. American Airlines, Union Pacific and Netflix reported their results on Thursday.
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