Wall Street reversed gains to end lower on Thursday, pulled down by a decline in high-growth stocks. Markets fell in the apprehension of policy tightening as Fed Chairman Jerome Powell said in an IMF debate that a 50 basis point hike was on the table. Earlier, Wall Street had opened in green as strong labor market data had come in. Bond yields breached multi-year peaks. All three major indexes ended in the red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) slipped 1.1% or 368.03 points to close at 34,792.76. Twenty-two components of the 30-stock index ended in the red, one remained unchanged, while seven closed in the green.
The tech-heavy Nasdaq Composite dropped 2.1% or 278.41 points to finish at 13,174.65, due to a decline in tech stocks.
The S&P 500 lost 1.5% or 65.79 points to end at 4,393.66. All the 11 broad sectors of the benchmark index closed in the red.
The Energy Select Sector SPDR (XLE), the Communication Services Select Sector SPDR (XLC) and the Utilities Select Sector SPDR (XLU) dipped 3.2%, 2.9% and 1.7%, respectively.
The fear-gauge CBOE Volatility Index (VIX) increased 11.6% to 22.68. A total of 12.27 billion shares were traded on Thursday, higher than the last 20-session average of 11.65 billion. Decliners outnumbered advancers on the NYSE by a 2.36-to-1 ratio. On Nasdaq, a 2.43-to-1 ratio favored declining issues.
Bond Yields And Oil Prices Resume Climb
On Thursday, U.S Treasury yields rose sharply as the benchmark 10-year yield traded above 2.9% for most of the session before setting at 2.896%. The 2-year yield reached 2.730%, its highest rate since December 2018, before dipping to 2.686%.
Oil prices gained ground with supply concerns as Russian forces stepped up their operation in eastern Ukraine. Brent crude settled up 1.4% at $108.33/barrel, and U.S. crude ended 1.6% higher at $103.79/barrel.
Powell’s Comments Stoke Concerns Of An Economic Slowdown
Fed Chairman Jerome Powell confirmed in an IMF debate on Thursday, that the central bank was determined to bring down inflation and that aggressive rate hikes of 50 basis points were possible as soon as in the May Fed meeting. With inflation currently three times more than the Fed’s target rate of 2%, Powell said that it would be appropriate to move quickly to address the issue.
Coupled with the fact that several other Fed officials recently struck a more hawkish tone, Powell’s comments came as a stern warning of imminent and aggressive policy tightening, and the markets reacted accordingly. Investors have been concerned for some time that in its bid to tackle inflation by tightening policy, Fed will end up slowing down the economy. High-growth and tech stocks were among the worst-hit sectors. Energy was hit the hardest, despite crude prices going up in the session.
Consequently, shares of Alphabet Inc.
GOOGL
and Amazon.com, Inc.
AMZN
lost 2.5% and 3.7%, respectively. Alphabet carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Economic Data
The Labor Department said on Thursday that initial jobless claims fell to 184,000, decreasing 2,000 for the week ending Apr 16. The four-week moving average came to 177,250, an increase of 4,500 from the previous week’s revised average of 172,750.
Continuing claims came in at 1,417,000, decreasing 58,000 from the previous week’s unrevised level of 1,475,000, the lowest since Feb 21, 1970. The 4-week moving average came in at 1,481,750, a decrease of 31,250 from the previous week’s revised average.
The Conference Board reported that the Leading Economic Index (LEI) had increased 0.3% in March. It had increased 0.6% in February.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
