Nasdaq closes sharply lower as investors dump growth stocks

[ad_1]

Fed Ends Bond Purchases, Points to Higher Interest Rates in 2022, Technology Is Worst Among 11 S&P 500 Sector Indexes, Financial Sector Rebound, Slips to Lenar After Losing Quarterly Profit

(Reuters) – The Nasdaq index ended sharply lower on Thursday as the Federal Reserve’s announcement of a faster end to pandemic-era stimulus pushed investors away from big tech companies and into more economically sensitive sectors.

Nvidia (NVDA.O), Apple (AAPL.O), Microsoft (MSFT.O), Amazon (AMZN.O), and Tesla (TSLA.O), all fell to the Nasdaq (.IXIC) and S&P 500 (.SPX) indexes. ) .

Most growth heavyweights have outperformed the broader market in 2021, with Nvidia shares up more than 100% over the year so far.

Register now to get free unlimited access to Reuters.com

Register

Unofficially, the Dow Jones Industrial Average (.DJI) fell 0.09% to close at 3,5893.36 points, while the S&P 500 (.SPX) lost 0.88% to 4,668.45.

The Nasdaq Composite (.IXIC) is down 2.47% to 15,180.42.

The US central bank said on Wednesday it would end its bond purchases in March, and indicated it would raise interest rates by three-quarters of a percentage point by the end of 2022. Read more

This has pleased investors who are increasingly concerned about rising inflation linked to the coronavirus pandemic. On Thursday, however, it contributed to a massive sell-off in growth stocks.

The S&P 500 (.IVX) Value Index rose, while the Growth Index fell sharply, reflecting investor sentiments that high-growth stocks tend to underperform when interest rates rise. The value index includes stocks that are likely to do well during an economic recovery.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, November 29, 2021. REUTERS/Brendan McDermid

“You see the money coming from growth, as it should. If we’re going into an environment where interest rates are going up, growth stocks are going to be less attractive,” said Dennis Dick, a trader at Bright Trading LLC.

“There is a lot of uncertainty as we approach 2022 … we will have a tighter Fed that will pull out the huge pot,” he said.

Among the 11 leading indicators of the S&P 500 sector, technology (.SPLRCT) declined, while financial (.SPSY) indices rose.

“The Fed gave the market what it wanted, and today I think investors are turning again into pandemic uncertainty, and they are also cautious as we approach the end of the year,” said Lindsey Bell, senior investment analyst at Ally Invest, in Charlotte. , North Carolina.

Recent readings of rising producer and consumer prices, as well as the rapidly spreading Omicron variant of the coronavirus, have raised concern. However, the S&P 500 is still up about 25% in 2021 and trading near record levels.

The CBOE Volatility Index (.VIX), often considered a measure of fear on Wall Street, fell to a three-week low.

Data showed that the number of Americans filing new claims for unemployment benefits rose moderately last week, remaining at levels consistent with tightening labor market conditions. Read more

Separately, a survey showed that production at US factories rose to the highest level in nearly three years in November. Read more

Lennar Corp (LEN.N) slumped after the home builder missed analysts’ estimates of quarterly earnings as pandemic-led supply chain problems pushed up timber costs and delayed home deliveries.

Register now to get free unlimited access to Reuters.com

Register

Additional reporting by Shreyyashi Sanyal in Bengaluru and Noel Randwich in Oakland, California; Editing by Sumyadb Chakrabarti, Magu Samuel and Dan Grebler

Our Standards: Thomson Reuters Trust Principles.

.

[ad_2]