Stock Market Today: Dow Slips, Bitcoin Prices Slide, HP Stock Flies

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Wall Street weighs indications from the Federal Reserve that it will move aggressively to tighten monetary policy. Dreamstime

Stocks were mixed Thursday, after more comments from a Federal Reserve official that point to aggressive monetary policy tightening. Technology stocks were faring the best after two days of sharp selling.

Shortly after the open, the Dow Jones Industrial Average fell 179 points, or 0.5%, after the index retreated 144 points on Wednesday. The S&P 500 was little changed. The technology-focused Nasdaq Composite rose 0.3%. All three indexes dropped Tuesday and Wednesday, with the S&P 500 and Nasdaq falling a total of 2.2% and 4.4%, respectively.

Overall, the market movements were more mild Wednesday. “After a two-day pullback surrounding the Fed minutes, the market may have had some time to digest the Fed’s outlook,” wrote Mike Loewengart, managing director of investment strategy at ETrade.

St. Louis Federal Reserve President James Bullard said in a speech that current Fed policy is too low by 300 basis points. That means he believes the benchmark lending rate must rise to above 3%. That’s relatively high, as markets have been expecting the Fed to lift the rate to around 2.75%.

The Fed is trying to combat high inflation by lifting rates, a move that could slow down economic growth.

Markets have already been digesting the latest developments from the Federal Reserve. Minutes from the Fed’s March meeting, released Wednesday, confirmed what Fed Governor Lael Brainard said on Tuesday, which is that the central bank will soon reduce the size of its balance sheet by letting its bondholdings expire without reinvesting the proceeds. The minutes also made it seem more than plausible that an interest rate hike of a half a percentage point—rather than the standard quarter point—is in the cards in the near term.

What seems new to the bond markets this week is that the Fed is indeed close to beginning its balance sheet reduction by $95 billion per month. That means less money moving into Treasury bonds, lowering bond prices and lifting their yields. The 10-year Treasury yield has risen to 2.62% from 2.41% at Monday’s close.

That surge in bond yields has caused technology stocks to suffer big losses this week. Higher yields on long-dated government bonds make future profits less valuable and many fast-growing tech companies are valued on the basis that they’ll churn out a bulk of their profit many years in the future.

But tech stocks were hanging in there Thursday, partly because the rise in the 10-year yield was slower to start the day. Plus, with earnings season coming up, tech companies will have a chance to move their stock prices higher if quarterly results beat expectations by a wide enough margin.

“We view tech stocks very positively from these oversold levels,” wrote Dan Ives, Wedbush Securities tech analyst. “1Q earnings will be a positive catalyst for tech stocks.”

Elsewhere, initial jobless claims were 166,000, better than the expected 200,000 and lower than the prior week’s 170,000.

Overseas, the pan-European Stoxx 600 was 0.2% higher, and Tokyo’s Nikkei 225 lost 1.7%, in line with other Asian indexes, which moved lower in a catch-up with Wall Street.

In the digital asset space, Bitcoin and other cryptocurrencies were under pressure. Bitcoin prices were down 4% over the past 24 hours to below $43,500, with smaller peer ether also 4% lower to above $3,200. Bitcoin prices neared $47,000 earlier this week while ether was trading above $3,500 recently.

Here are six stocks on the move Thursday:

JD.com (ticker: JD) fell 3.3% in the US following news that the group’s founder, Richard Liu, exited as CEO of the Chinese e-commerce giant with immediate effect. The company’s president, Lei Xu, will take over, while Liu will remain as chair.

Shell (SHEL) dropped 1.3% in US trading even after the oil major said it expects to write down up to $5 billion in the first quarter following its decision to pull out of Russia, warning that cash flows from operations would be negatively impacted.

HP Inc. (HPQ) jumped 16% after Warren Buffett’s Berkshire Hathaway (BRK.A and BRK.B) revealed it had taken a stake in the computer and printer maker.

Coupa Software (COUP) stock rose 4.1% after getting upgraded to Outperform from In-Line at Evercore.

Conagra Brands (CAG) stock rose 1.9% after the company reported a profit of 58 cents a share, in line with estimates, on sales of $2.91 billion, above expectations for $2.85 billion.

Wayfair (W) stock gained 0.7% even after getting downgraded to Underweight from Equal Weight at Wells Fargo.

Write to Jacob Sonenshine at [email protected] and Jack Denton at [email protected]

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