Technology shares were recovering Thursday after selling off as bond yields soared to epidemic-era highs.
In midday trading, the
Dow Jones Industrial Average
The index fell 102 points, or 0.3%, after the index fell 392 points, or more than 1%, on Wednesday. the
Standard & Poor’s 500
It rose 0.1%, while heavy technology
It added 0.3% after falling more than 1% earlier in the session.
The 10-year Treasury yield rose to 1.75%, but remained just below that level, after closing at 1.51% on Friday. Thursday’s rally comes a day after the Federal Reserve announced that it will raise interest rates soon. The current level of return is the highest in the epidemic era, which was last achieved in March of 2021.
The central bank indicated in its December minutes, published on Wednesday, that it is likely to raise interest rates several times this year, starting in the next few months. The Fed is trying to fight high inflation lately, which seems to be still stuck.
The Fed minutes also revealed that it is considering shrinking its balance sheet. Currently, the Fed buys less bonds each month, but when it lowers its balance sheet, it will sell the bonds. This can help lower bond prices, and raise their yields. The bond market appears to be preparing for this.
This meant more pain for tech stocks. The Nasdaq is down about 6 percent from its all-time high, which it hit in late November. Higher bond yields make future earnings less valuable – and many fast-growing technology companies are counting on big profits for several years to come.
But buyers stepped in to hold tech stock prices steady late in the morning.
One reason: The 10-year yield stall just below the pandemic-era peak suggests it may not yet be ready to rise any further. “There is resistance in the 1.75% region,” said John Kolovos, chief technical strategist at Macro Risk Advisors.
This means that there is a limit to how much tech stocks can continue to fall at the moment. “With the Nasdaq, we should expect to see a bounce” after it fell as much as it fell, Kolovos said.
Bitcoin and other cryptocurrencies continued to feel pressure – but stabilized – after selling off the leading digital asset following the release of the Federal Reserve’s meeting minutes. Bitcoin plunged as much as 9% before losses fell as much as 1% to $42,940, according to price data from CoinDesk. Ether fell 13% before the loss eased back to 4%. Cryptocurrencies are essentially long-term bets, which speculate that the coins will have some measurable value in the future, making their prices sensitive to changes in long-term bond yields. So with the returns being paused, it is not surprising that the cryptocurrency losses have also been paused.
The Dow, home to the most economically sensitive stocks, has fallen in recent days, but not as much. The index is down just over 1% from its new year high. An increase in interest rates can have a negative effect on economic growth.
Growth stocks may continue to see volatility as long as markets remain uncertain about the Fed’s future plans. Fed turnaround could ‘hurt growth’ [stocks] more than the cyclical and defensive sectors,” wrote Tom Essay, founder of Sevens Report Research.
The price of West Texas Intermediate crude rose more than 2% to more than $80 a barrel. that sent
SPDR power strip selection
Exchange-traded fund (XLE) is up 1.7%.
Foreign markets were closed before the minutes were released, so the response of traders in Europe and Asia was postponed until Thursday. Tokyo
Which analysts say is closely related to the Nasdaq, is down 2.9%. pan europe
It was 1.3% lower.
“Last night’s December FOMC meeting minutes shattered the calm of financial markets early in the year,” said Jim Reed, UK strategist at Deutsche Bank.
“The shift in sentiment came on the back of the continued rise in sovereign bond yields,” Reid added. “There are a few other big questions outstanding, including how many rate hikes will happen before the quantitative tightening begins and how Treasury and mortgage holdings will be handled during the run-off.”
On Friday, the spotlight will be on the December jobs report, with 422K jobs expected to be added. Markets want to see that people are back to work at a rapid pace, but not so fast that the Federal Reserve becomes more likely to tighten monetary policy quickly.
On Thursday, data showed that weekly jobless claims rose to 207,000, higher than the expected 195,000 and worse than last week’s result of 200,000.
However, other economic data will have more influence on market expectations regarding Fed policy. “The slight increase in unemployment claims is unlikely to rock the boat — inflation is center stage when it comes to potential Fed moves,” wrote Mike Lowengart, managing director of investment strategy at ETrade.
The CPI is due for release on January 12th.
Here are seven stocks on the move Thursday:
Queen Piece (Stock ticker: COIN) is down 1% after falling 6.4% on Wednesday. She and other crypto-related stocks have been feeling the heat from the slide in the price of digital assets.
Digital Marathon (MARA) shares fell 1.3 percent, with
Blockchain riot (RIOT) down 4.3%; Both stocks fell 12% to 13% on Wednesday.
micro . strategy (MSTR) decreased by 2.4%.
Walgreens Boots Alliance (WBA) stock initially rose, then fell 1.4% after the company reported earnings of $1.68 per share, topping estimates of $1.36 per share, on sales of $33.9 billion, beating expectations of $32.9 billion. The company also raised its guidance.
Texas Roadhouse (TXRH) (TXRH) stock gained 0.6% after being upgraded to Buy from Neutral on UBS.
targeting (TGT) (TGT) stock fell 0.2% after the rating was downgraded to equal weight from Wells Fargo’s overweight.
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