Nasdaq 100 sinks more than 2.5 percent as technology rout deepens | Financial Markets News

The tech-heavy Nasdaq led losses on Wall Street amid growing concerns that the US Federal Reserve will raise interest rates.

by And Bloomberg

Technology companies led shares losses amid widespread calls from Federal Reserve officials to raise interest rates to prevent inflation from taking hold in the US economy.

Traders also assessed the news that a divided Supreme Court blocked President Joe Biden’s staple to vaccinate more people, rejecting a rule that would have required 80 million workers to have regular injections or checkups. The Nasdaq 100 fell more than 2.5%, led by losses in Microsoft Corp. and Tesla Inc. Boeing stepped up as Bloomberg News reported that the 737 Max is set to resume commercial flights in China as soon as this month.

Fed Governor Lyle Brainard said officials could raise interest rates as early as March to ensure generational price pressures are in control. Philadelphia Fed President Patrick Harker would prefer a March dismissal and three or four hikes for 2022. His Chicago counterpart Charles Evans — who is seeing a similar number of increases this year — said he could not judge the likelihood of a first increase in two months. Richmond Fed President Thomas Barkin said officials would be in a position to begin normalizing interest rates at their March meeting if conditions supported it.

“We are in a position where a lot of what was positive for stocks will probably move to neutral or negative, and while there are still few alternatives, it is setting the stock market for more volatility over the next few months as we see how the data Alpine Woods Capital Investors: “They shook and how the Fed would react.”

Banking on redemption

Rising prices – as a result of strong economic growth – can push investors towards value stocks, which tend to be more cyclical and provide cash flow in the near term. This leaves growth stocks willing buyers. The long-term earnings potential of expensive tech companies could become less attractive amid rising inflation.

“Technology is the classic example of an area where stocks have really benefited from lower rates,” said Kara Murphy, chief investment officer at Kestra Investment Management. “With expectations rising for rates going forward, it makes sense that this is the area that will be hit the most.”

Prices paid to US producers slowed in December as two key factors for inflation in 2021 – food and energy – fell from the previous month, marking a respite in the recent trend of big increases. At the same time, producers continued to face a variety of material shortages, limited labor supply, and transportation bottlenecks that drove prices up last year.

Morgan Stanley clients expect financial stocks to outperform this year, according to a survey at its annual conference this week. The survey showed that 45% of respondents are betting that the industry will be the best performer in 2022. The company said in a note Thursday that it is the highest voter turnout for the sector since 2015.

Here are some of the main events this week:

  • Bank of Korea policy decision and briefing on Friday.
  • Wells Fargo, Citigroup and JPMorgan are due to report earnings on Friday.
  • US business inventories, industrial production, University of Michigan consumer confidence, retail sales on Friday.
  • New York Fed President John Williams speaks on Friday.

For more market analysis, read our MLIV blog.

Some of the main movements in the markets:

Stores

  • The S&P 500 is down 1.4% as of 4 p.m. New York time
  • The Nasdaq 100 is down 2.6%.
  • Dow Jones Industrial Average down 0.5%
  • The MSCI World Index is down 1%.

Currencies

  • The Bloomberg Spot Dollar Index is unchanged
  • The euro was little changed at $1.1452
  • The British pound changed little at $1.3705
  • The Japanese yen rose 0.4% to 114.14 per dollar

bonds

  • The yield on the 10-year Treasury fell four basis points to 1.70%.
  • Germany’s 10-year yield fell three basis points to -0.09%
  • The yield on British 10-year bonds fell three basis points to 1.11%.

goods

  • West Texas Intermediate crude fell 1.4 percent to $81.46 a barrel
  • Gold futures fell 0.3 percent to $1,821.20 an ounce

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