Stocks slumped Thursday after another technology-led selloff on Wednesday.
The Nasdaq ended lower by more than 2%, extending losses for a third straight day after the tech-heavy index dropped 2.7% during the regular session on Wednesday. At session lows, both the Nasdaq and S&P 500 erased gains for the year-to-date. The Nasdaq also briefly dipped into correction territory intraday before paring some losses, dropping by more than 10% from at recent record closing high.
The moves lower came even after a new report on weekly unemployment claims came in better than expected, pointing to improving employment trends after a disappointing print on private payroll growth came in just a day earlier. During a public appearance Thursday afternoon, Federal Reserve Chair Jerome Powell failed to affirm that the central bank would immediately work to stave off inflationary pressures.
The past several weeks have seen investors increasingly rotate away from the high-growth names that led the markets higher in 2020, given that a greater economic reopening appears imminent and apt to lift stocks badly beaten down last year. Technology stocks came under exceptional selling pressure as traders turned their focus to stocks poised to benefit more directly from an impending economic reopening.
At the same time, the recent, rapid rise in Treasury yields has also deterred investors from growth stocks, with interest rates closely tied to borrowing costs for companies and consumers. The 10-year Treasury yield climbed to around 1.55% on Thursday following Powell's appearance, with the move higher representing an increase of more than 50 basis points from levels just a month ago. Bank stocks have outperformed, and the S&P 500 financials sector has been among the top performers over the year-to-date, given that bank profits tend to benefit from higher-rate environments.
"I think we just have another example of the reality show for finance geeks, and that is ‘bonds behaving badly,’ Jason Ware, chief investment officer of Albion Financial Group, told Yahoo Finance. "And as rates rise, as yields rise, what we’re continuing to see is this push against owning growth companies and in particular big cap technology. And I think at the outset that makes sense: It starts to shake some complacency as yields go up, and portfolio managers – especially those that are more short-term oriented – start to rethink those positions."
Meanwhile, the U.S. Senate continues to debate the details of another coronavirus relief package, with the House of Representatives having advanced President Joe Biden's $1.9 trillion proposal last weekend. On Wednesday, the White House agreed with moderate Senate Democrats to tighten the eligibility rules for Americans to receive a $1,400 stimulus check, bringing the maximum income threshold down to $80,000 from $100,000 included in the House bill.
4:02 p.m. ET: Nasdaq sinks 2.1%, erasing year-to-date gains and closing in on a correction as Treasury yields surge
Here were the main moves in markets as of 4:02 p.m. ET:
S&P 500 (^GSPC): -51.14 (-1.34%) to 3,768.58
Dow (^DJI): -346.61 (-1.11%) to 30,923.48
Nasdaq (^IXIC): -274.28 (-2.11%) to 12,723.47
Crude (CL=F): +$2.88 (+4.70%) to $64.16 a barrel
Gold (GC=F): -$21.00 (-1.22%) to $1,694.80 per ounce
10-year Treasury (^TNX): +8 bps to yield 1.5500%
1:06 p.m. ET: Stocks extend declines, Nasdaq drops 2%
Here's where the major indexes were trading Thursday afternoon:
S&P 500 (^GSPC): 3,774.89, -44.83 points (-1.17%)
Dow (^DJI): 30,963.77, -306.32 points (-0.98%)
Nasdaq (^IXIC): 12,730.35, -266.18 points (-2.04%)
Crude (CL=F): $64.28 per barrel, +$3.00 (+4.9%)
Gold (GC=F): $1,696.50 per ounce, -$19.30 (-1.12%)
10-year Treasury (^TNX): +6.6 bps to yield 1.536%
12:20 p.m. ET: Powell reiterates that economy remains 'a long way' from Fed's goals
Federal Reserve Chair Jerome Powell said during public remarks on Thursday that the U.S. economy still remains "a long way" from the goals of the central bank, suggesting the Fed would remain accommodative in its monetary policy posturing.
"It's a lot of ground we have to cover," Powell said during the Wall Street Journal's virtual Jobs Summit Thursday afternoon. As of January, the U.S. remained 9.9 million jobs short of its pre-pandemic levels, with an unemployment rate still highly elevated compared to February of last year.
Powell also suggested that the persistently low inflation rate environment would remain in place even as economic activity picks up in the coming months, saying that it was "unlikely" for underlying inflationary trends to change rapidly.
10:00 a.m. ET: Mortgage rates jump above 3% for the first time in seven months, pressuring housing market activity
U.S. mortgage rates extended their recent leg higher to break above 3% for the first time since July 2020, raising concerns that the housing market's breakneck growth last year may sharply lose momentum.
Freddie Mac data showed Thursday morning that the average for a 30-year fixed rate mortgage increased to 3.02% for the period ending March 4. A week earlier, mortgage rates were at 2.97%, already creeping above the record low of 2.65% logged at the beginning of January this year.
9:55 a.m. ET: Square to purchase music platform Tidal, add Jay-Z to board
Jack Dorsey's payments company Square (SQ) announced Thursday morning that it will be buying a majority stake in the music and entertainment platform Tidal. Square is set to pay $297 million in cash and stock as part of the deal.
Musician Jay-Z, who purchased Tidal in 2015 for $56 million, will join the board of directors of Square, and also retain some ownership in the company after the deal closes.
"New ideas are found at intersections, and we believe there’s a compelling one between music and the economy. I knew TIDAL was something special as soon as I experienced it, and it will continue to be the best home for music, musicians, and culture," Dorsey said in a press statement.
Shares of Square dropped 3% intraday on Thursday amid a broader drop in tech stocks.
9:45 a.m. ET: Kroger shares rise after 4Q results top estimates, as grocer got another boost from pandemic pantry-loading
Shares of grocery giant Kroger (KR) posted fourth-quarter sales and profit that easily exceeded consensus expectations, aided by ongoing strength in consumer at-home eating trends during the pandemic. Shares rose about 1% Thursday morning.
Fourth-quarter identical store sales jumped 10.6%, topping expectations for a rise of 10.1%, according to Bloomberg consensus data. That included a digital sales growth surge of 118%. Overall sales grew 6.4% to $30.74 billion in the fourth quarter, bringing full-year sales up 13.6% to a record $26.2 billion. And on the bottom line, adjusted earnings of 81 cents per share exceeded expectations for 69 cents a share.
However, for the current fiscal year, Kroger sees momentum slowing down after a surge in growth in 2020. Identical store sales are expected to fall between 3% and 5% year-over-year. However, Kroger's profit guidance still topped estimates, with the company seeing full-year adjusted earnings of between $2.75 and $2.95 a share.
9:31 a.m. ET: Stocks trade mixed after encouraging labor market data, Nasdaq steadies after selloff
Here's where markets were trading just after market open:
S&P 500 (^GSPC): 3,818.35, -1.37 points (-0.04%)
Dow (^DJI): 31,311.34, +41.25 points (+0.13%)
Nasdaq (^IXIC): 12,953.60, -44.15 points (-0.18%)
Crude (CL=F): $62.34 per barrel, +$1.06 (+1.73%)
Gold (GC=F): $1,711.90 per ounce, -$3.90 (-0.23%)
10-year Treasury (^TNX): +0.2 bps to yield 1.472%
8:30 a.m. ET: Jobless claims rose less than expected last week, steadying below 750,000
Weekly unemployment claims ticked up last week but by a smaller than expected margin, picking up slightly after reaching the lowest level since November during the prior week.
Initial jobless claims increased by 9,000 from the prior week to 745,000 for the week ended February 20, the Labor Department said in its weekly report Thursday morning. This came in better than the 750,000 expected, according to Bloomberg consensus data. The prior week's level was upwardly revised slightly to 736,000, from the 730,000 previously reported.
Continuing jobless claims fell for a seventh straight week to 4.295 million during the week ended February 13. This was roughly in line with the 4.300 million expected, but declined from the 4.419 million during the prior week.
7:16 a.m. ET Thursday: Stock futures point to a lower open
Here's where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): 3,804.75, down 12 points or 0.31%
Dow futures (YM=F): 31,178.00, down 58 points or 0.19%
Nasdaq futures (NQ=F): 12,630.75, down 51 points or 0.4%
Crude (CL=F): $61.31 per barrel, +$0.03 (+0.05%)
Gold (GC=F): $1,713.50 per ounce, -$2.30 (-0.13%)
10-year Treasury (^TNX): -0.6 bps to yield 1.464%
6:01 p.m. ET Wednesday: Stock futures trade flat
Here's where markets were trading as the overnight session kicked off:
S&P 500 futures (ES=F): 3,815.00, down 1.75 points or 0.05%
Dow futures (YM=F): 31,241.00, up 5 points or 0.02%
Nasdaq futures (NQ=F): 12,679.00, down 2.75 points or 0.02%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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