U.S. stocks were mixed Thursday, with the Nasdaq Composite posting a small loss after rising yields sparked a tech-led rout this week as investors dumped growth stocks.
What are major indexes doing?
- The Dow Jones Industrial Average DJIA, -0.28% fell 53.11 points, or 0.2%, at 36,354.
- The S&P 500 SPX, +0.08% edged up 2.64 points, or 0.1%, to 4,703.22.
- The Nasdaq Composite COMP, +0.07% edged down 22.82 points, or 0.2%, to 15,077.35.
On Wednesday, the Dow industrials fell 392 points, or 1.1%, while the S&P 500 dropped 1.9% and the Nasdaq Composite skidded 3.3%. For the Nasdaq, it was the worst one-day percentage drop since Feb. 25.
What’s driving markets
Markets were rocked Wednesday by the release of minutes from the Federal Open Market Committee meeting in mid-December, which showed officials not only talked about quicker and more frequent interest-rate hikes but also about a more aggressive wind down of its $8.9 trillion balance sheet than the last time it reduced it.
The yield on the 10-year Treasury TMUBMUSD10Y, 1.731% was 1.727% on Thursday, rising more than 21 basis points so far in the new year.
Higher rates are particularly troublesome for growth stocks that are richly valued on the promise of high future earnings. The ARK Innovation ETF ARKK, -0.70%, a proxy for highly speculative tech companies, slumped over 7% on Wednesday and was down more than 2% on Thursday.
“Growth companies had been the main beneficiaries of extraordinarily low real and nominal interest rates, which pushed valuations to elevated levels. As the Fed begins to normalize policy, it’s logical that these stocks will face the strongest headwinds, similar to what we saw on Wednesday. Within the U.S. equity market, we continue to have a preference for value stocks over growth stocks,” said Mark Haefele, chief investment officer of global wealth management at UBS.
Data showed first-time jobless claims rose slightly last week to 207,000, but remained near a 52-week low. Claims rose from a revised 200,000 in the previous week. Economists polled by The Wall Street Journal had expected initial claims to total a seasonally adjusted 195,000 in the seven days ended Jan. 1.
The Institute for Supply Management said its services index dropped to 62% last month from a record 69.1% in November. Readings above 50% signal expansion and numbers above 60% are considered exceptional.
Which companies are in focus?
- Shares of Bed Bath & Beyond Inc. BBBY, +8.04% initially tumbled in premarket trade after the retail company reported a surprise fiscal third-quarter loss and sales that missed expectations. But shares bounced back and were up nearly 15% in early action.
- Walgreens Boots Alliance Inc. WBA, -1.09% shares rose 2.6% after the pharmacy retailer reported fiscal first-quarter results that beat expectations and raised its full-year guidance.
- Shares of Constellation Brands Inc. STZ, +0.06% were up 0.3% after the company said its third-quarter net income fell to $470.8 million, or $2.48 per Class A common share from $1.28 billion, or $6.68 a share in the year-ago period
How are other assets trading?
- The ICE U.S. Dollar Index DXY, -0.03%, a measure of the currency against a basket of six major rivals, was little changed.
- Oil futures saw strong gains, with the U.S. benchmark CL00, +2.49% up 2.5% after finishing Wednesday at a six-week high. Gold futures GC00, -1.98% fell 2%.
- Bitcoin BTCUSD, -1.60% was down 1.6%.
- The Stoxx Europe 600 SXXP, -1.37% traded1.3% lower, while London’s FTSE 100 UKX, -0.97% declined 0.9%.
- The Shanghai Composite SHCOMP, -0.25% fell 0.3%, while the Hang Seng Index HSI, +0.72% rose 0.7% and Japan’s Nikkei 225 NIK, -2.88% dropped 2.9%.
Source: This post first appeared on http://marketwatch.com/
