Printable Page Headline News   Return to Menu - Page 1 2 3 5 6 7 8 13
 
 
US Stocks Fall to New Low on Techs     01/18 16:26

   Technology companies led a broad sell-off on Wall Street Tuesday as bond 
yields surged amid renewed jitters that the Federal Reserve will act more 
aggressively than expected to tackle rising inflation.

   (AP) -- Technology companies led a broad sell-off on Wall Street Tuesday as 
bond yields surged amid renewed jitters that the Federal Reserve will act more 
aggressively than expected to tackle rising inflation.

   The S&P 500 fell 1.8%, with about 90% of the stocks in the benchmark index 
closing in the red. The Nasdaq, which is heavily weighted with technology 
stocks, slid 2.6%. The Dow Jones Industrial Average fell 1.5%.

   The major indexes' losses have mounted this month as rising inflation and 
the virus pandemic's latest surge cause investors to take caution.

   Heightened expectations of a rate hike from the Fed have kept Treasury 
yields rising. The 10-year Treasury hit 1.87% Tuesday, the highest since 
January 2020. It was at 1.77% late Friday.

   Investors are now pricing in a better than 86% probability that the Fed will 
raise short-term rates at its meeting of policymakers in March. A month ago, 
they saw less than a 47% chance of that, according to CME Group.

   The 10-year yield "just continues to trudge higher, pricing in a more and 
more aggressive Federal Reserve," said Ross Mayfield, investment strategy 
analyst at Baird. "Until over the weekend, I hadn't seen any speculation about 
two rate hikes at the March meeting, and now you're starting to hear that 
chatter."

   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 indexes all hit 
a new low for the year. The Nasdaq has borne the brunt of the losses, shedding 
7.3% this month. That puts the index within 2.7% of a correction, Wall 
Street-speak for when a stock or index falls 10% or more from its last peak. 
The S&P 500 is down almost 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 fast. The central bank has hastened 
its plan to trim bond purchases and is considering raising interest rates 
earlier and more often than Wall Street had expected.

   The Fed is under pressure to curtail inflation, which jumped last month at 
its fastest pace in nearly 40 years. At the same time, the job market has 
bounced back from last year's brief but intense coronavirus recession, leaving 
the unemployment rate last month at a pandemic low 3.9%, giving the central 
bank more leeway to rein in the unprecedented support it's been providing the 
economy since the pandemic struck.

   While higher rates could help stem the high inflation sweeping the world, 
they would also mark an end to the conditions that have put financial markets 
in "easy mode" for many investors since early 2020.

   Higher rates also make shares in high-flying tech companies and other 
expensive growth stocks less attractive. Big technology stocks, which have an 
outsized influence on the S&P 500 because of their high valuations, have 
weighed heavily on the market this year as investors shift money in 
anticipation of the higher rates.

   The sector was the biggest drag on the S&P Tuesday. Apple fell 1.9% and 
chipmaker Nvidia slid 3.9%.

   Banks also weighed heavily on the market after Goldman Sachs said its 
fourth-quarter profit fell by 13% from a year earlier, largely due to the hefty 
pay packages Goldman is paying staff. Goldman's results echoed those of 
JPMorgan and Wells Fargo last week, which also flagged lower profits and higher 
expenses due to increased employee compensation costs.

   Goldman shares slumped 7%, while JPMorgan slid 4.2%. Wells Fargo was down 
2.4%.

   Small company stocks, a gauge of confidence in economic growth, also lost 
ground. 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 
facility in the capital of the United Arab Emirates. The price of U.S. crude 
oil rose 1.9% to $85.43 a barrel, a 7-year high. The rally in oil prices gave 
some energy stocks a boost. Exxon Mobil rose 1.7%.

   Investors returning after U.S. markets were closed Monday for the Martin 
Luther King Jr. Day holiday also reviewed the latest batch of corporate 
earnings and deal news Tuesday.

   Activision Blizzard surged 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 a busy week of earnings reports ahead. A key focus will be on 
how companies in different industries are handling persistent supply chain 
issues. Many companies have already warned about the impact on their finances 
and operations, despite raising prices on consumer goods to offset the impact.

   Bank of America, UnitedHealth and United Airlines report results on 
Wednesday. American Airlines, Union Pacific and Netflix report their results on 
Thursday.

 
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN