Stocks were mixed Thursday morning after equities did an about-face in the previous session, plummeting from record highs as investors mulled the likelihood of tighter Federal Reserve policy and interest rate hikes as soon as March.
The Dow extended declines to turn negative year-to-date, while the S&P 500 and Nasdaq hovered around their flatline. Wednesday marked a bearish day for markets, spurred by the release of minutes from the Federal Open Market Committee’s (FOMC) meeting December 15 that flagged concerns from policymakers about worsening inflation and signaled more aggressive intervention by the central bank.
“Markets need time to settle, we’ve got earnings season starting in a couple weeks’ time,” OANDA market analyst Craig Erlam told Yahoo Finance Live.“I think that’s when people start to get a better grasp, or at least look at these markets through a more rational lens.”
Renewed pressures in tech amid interest rate worries sent the Nasdaq spiraling 3.1% on Wednesday in its biggest drop since March, and the S&P 500 shed 1.9%, dragged down by losses in real estate. The Dow Jones Industrial Average tumbled more than 1%, falling for the first time this year.
“We actually like tech for all of 2022 in our outlook, but there’s no doubt that tech is going to take it on the chin when the yield curve does what it does,” Wells Fargo CIO of Wealth & Investment Darrell Cronk told Yahoo Finance Live. “[The response to] Fed meeting minutes suggests that long-duration assets like tech or REITs that are interest-rate sensitive will really come under pressure in moments when you believe the Fed is going to take a more hawkish stance.”
The minutes, underscoring this hawkishness, helped the benchmark 10-year Treasury yield top 1.7%, its highest level since April.
“The primary piece of the puzzle is the Fed,” Zephyr market strategist Ryan Nauman told Yahoo Finance Live. “Markets don’t really react too greatly to when the Fed starts hiking rates — it’s the pace — and if the Fed increases the pace of interest rate hikes and there are a couple of surprise hikes in there to tame inflation, that’s when we can really get an impact on equity markets and see a steep pullback.”
Investors weighed a fresh read on initial weekly jobless claims Thursday morning that showed first-time unemployment filings ticked up but remained near a 52-year low last week, signaling continued recovery in the labor market as high demand for workers pours into the new year. The Labor Department’s latest read on initial jobless claims showed 207,000 Americans filed for unemployment in the week ending January 1.
Employment figures will remain in the spotlight for the rest of this week. The monthly jobs report due for release on Friday is expected to offer a more meaningful look at the strength of hiring and labor force participation — key measures of the U.S. economy.
Traders also assessed data on Wednesday that showed private payroll gains last month surpassed economist estimates. ADP, whose report sets expectations for Friday’s “official” government jobs numbers, reported private sector employers added back 807,000 jobs during the final month of November, nearly doubling consensus forecasts and suggesting job growth picked up to help relieve some labor shortages.
3:17 p.m. ET: Royal Caribbean stock slides after short call
“We are short $RCL, which we believe to be one of the most dislocated ‘re-opening’ stocks on the market today,” the firm wrote. “The outlook for $RCL and the cruise industry is far more grim than other hospitality and leisure ‘post-Covid’ stories.”
Royal Caribbean was trading down 3.01% as of 3:17 p.m. to $78.19 per share.
3:03 p.m. ET: Nasdaq sell-off echoes dot-com crash
The Nasdaq Composite is on pace for its biggest weekly decline since November, even as it rose in intraday trading session on Thursday, according to Bloomberg data. Wednesday’s loss of 3.3% marked its worst single-day session since last February.
A near-record number of technology stocks have dropped by around 50%, resembling the dot-com crash. Bloomberg data indicated roughly four in every 10 companies on the Nasdaq have seen their market values halve from their 52-week highs.
2:30 p.m. ET: Meme stocks jump after individual traders step in
Retail investors helped lift beaten down meme stocks after a volatile start to the trading session for the group after Bed Bath & Beyond Inc. (BBBY) reported quarterly results that missed estimates on the top and bottom lines and slashed its full-year forecast.
Bed Bath & Beyond was up 10.81% in intraday trading as of 1:28 p.m. to $14.81 after jumping as much as 23% earlier in the session. GameStop was up 2.24% to $132.27 per share and Express ticked 2.62% higher to $3.13 per share.
11:35 a.m. ET: Mortgage rates soar to highest level since May 2020
Mortgage rates rose to their highest level in more than a year and a half after details from the Federal Reserve’s last policy-setting meeting released on Wednesday hardened expectations for a higher interest-rate environment.
The rate on the 30-year fixed mortgage jumped from 3.11% to 3.22% this week, according to Freddie Mac. The increase on the rate — the most common loan used by homebuyers — places it at the highest level since May 2020.
11:28 a.m. ET: Dow turns negative year-to-date
Here were the main moves in markets as of 11:28 a.m. ET:
S&P 500 (^GSPC): +0.85 (+0.02%) to 4,701.43
Dow (^DJI): -118.85 (-0.33%) to 36,288.26
Nasdaq (^IXIC): +17.53 (+0.12%) to 15,117.70
Crude (CL=F): +$1.90 (+2.44%) to $79.75 a barrel
Gold (GC=F): -$34.60 (-1.90%) to $1,790.50 per ounce
10-year Treasury (^TNX): +3.4 bps to yield 1.7390%
11:00 a.m. ET: New orders for U.S.-manufactured goods surge in November
The Commerce Department reported Thursday morning that U.S. factory orders accelerated in November, climbing 1.6% during the month.
October’s estimate was revised higher to show orders rising 1.2% instead of 1.0% as previously reported.
The agency reported that despite the increase in orders, business spending on equipment likely struggled to rebound in the fourth quarter.
Manufacturing accounts for 11.9% of the economy and is supported by businesses restoring expended inventories.
10:45 a.m. ET: Rivian tumbles below IPO price
The drop also comes one day after rival investor Amazon.com Inc. (AMZN) signed a deal with Fiat and Alfa Romeo carmaker Stellantis NV to develop vans that use the commerce giant’s software and deploy electric delivery vans made by the Italian automaker.
Rivian was down 7.57% to $83.20 per share as of 10:55 a.m. Amazon was mostly flat, trading at about $3,271 a share as of the same time.
9:30 a.m. ET: Markets see muted open following Fed-prompted sell off
Here were the main moves at the start of Thursday’s trading session:
S&P 500 (^GSPC): -1.77 (-0.04%) to 4,698.81
Dow (^DJI): -7.92 (-0.02%) to 36,399.19
Nasdaq (^IXIC): -57.40 (-0.38%) to 15,042.77
Crude (CL=F): +$2.18 (+2.80%) to $80.03 a barrel
Gold (GC=F): -$37.10 (-2.03%) to $1,788.00 per ounce
10-year Treasury (^TNX): +2.5 bps to yield 1.7300%
9:05 a.m. ET: November U.S. trade deficit nears record high
The U.S. is on pace to see its biggest annual trade deficit.
The Commerce Department reported on Thursday that November’s read jumped to a near-record $80.2 billion, 19.3% higher than the October deficit of $67.2 billion and just below the all-time monthly record of $81.4 billion reported in September.
The agency’s final estimate is set to be reported next month.
8:30 a.m. ET: Jobless claims up from prior week but hold at pre-COVID lows
First-time unemployment filings ticked up but remained near a 52-year low last week, signaling continued recovery in the labor market as high demand for workers pours into the new year.
The Labor Department’s latest read on initial jobless claims showed 207,000 Americans filed for unemployment in the week ending January 1. The figure was up from consensus Bloomberg estimates of 195,000 but hovered around the key 200,000 level. The previous week’s print of 198,000 marked the second lowest number of claims during the pandemic.
Continuing claims came in at 1.754 million, compared to an expected 1.678.
“Fortunately for workers, employers have not been in a rush to cut jobs. New claims for unemployment benefits remain near decades-low levels,” Mark Hamrick, senior economic analyst for Bankrate, wrote in an email. “The question remains whether there will be sufficient workers to fill available positions and how many individuals will be willing to re-join the labor force, by working or looking for work.”
7:00 a.m. ET: Futures contracts mixed following Wednesday sell-off
Here were the main moves ahead of market open:
S&P 500 futures (ES=F): -0.75 points (-0.02%), to 4,691.75
Dow futures (YM=F): +72.00 points (+0.20%), to 36,363.00
Nasdaq futures (NQ=F): -70.00 points (-0.44%) to 15,696.50
Crude (CL=F): +$0.93 (+1.19%) to $78.78 a barrel
Gold (GC=F): -$27.80 (-1.52%) to $1,797.30 per ounce
10-year Treasury (^TNX): +0.00 bps to yield 1.705%
6:02 p.m. Wednesday ET: Stock futures open sideways after equities deepen losses
Here were the main moves in markets heading into the overnight session: