The technology stocks in the US market have been bearing the brunt after the hawkish commentary from the Federal Reserve. Nasdaq 100 closed at 13,990.21 almost 2.35% down on April 11, 2022. NVIDIA, Seagen, Tesla, Microsoft, and Marvell Technology were among the top losers. The tech heavy Nasdaq 100 is almost at the same level over the last 12-months but down by almost 15 per cent since the start of 2022.
Energy, healthcare and aluminum stocks were some of the other laggards in the broader market. China gaming, banks, insurers, retail, homebuilders, airlines, cruise lines, autos (ex-EVs) and steel held up better.
Meanwhile, Elon Musk may increase stake in Twitter Inc. As Musk has declined to join the company board. Twitter shares gained 1.69% as by declsning to join the board, Musk is keeping the option open to increase stake beyond 14.9%.
The Dow Jones Industrial Average(DJIA) ended 413.04 points, or 1.19%, lower at 34,308.08. According to Dow Jones Market Data, this was the Dow industrials’ largest one-day point and percentage drop since March 31.
The S&P 500 (SPX) closed down by 75.75 points, or 1.7%, at 4,412.53. It was the index’s largest one-day point and percentage decline since March 7.
Russia’s invasion of Ukraine, rising inflation and impending rate-hikes, recession fears, reversal of Covid cases in China and oil prices are keeping the market participants on the tenterhooks.
Inflation in the US is already at a 40-year high and amidst the fears of runaway inflation, markets are staring at a half-point rate hike from the Federal Reserve in May and the rapid unwinding of the central bank’s balance sheet.
The yield on the 10-year Treasury rose 6.6 basis points to 2.78%, its highest level since Jan. 18, 2019.
Meanwhile, the 30-year climbed 7.5 basis points to 2.82%, the highest since May 21, 2019. Ten- and 30-year rates are up, respectively, for the seventh and sixth straight trading days.
Yields move in the opposite direction to prices. Rising bond yields are acting as a headwind for stocks, particularly tech and other growth stocks in which valuations are based on expected profit and cash flow far into the future. Higher yields on risk-free Treasurys mean those future flows are less valuable in present terms.
Read More: Nasdaq 100 falls 2.35% as technology stocks bear the brunt of soaring Treasury yields