US stocks consolidate after rate hike triggered tech sell-off

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US stocks were mixed on Thursday, with the Nasdaq Composite posting a small loss after rising yields triggered a technology rout this week as investors shed growth stocks.

What are the main indexes doing? The Dow Jones Industrial Average DJIA, -0.03%, lost 53.11 points, or 0.2%, to 36,354. The S&P 500 SPX, + 0.30%, gained 2.64 points, or 0 , 1%, at 4,703.22. The Nasdaq Composite COMP, + 0.36%, edged down 22.82 points, or 0.2%, to 15,077.35.

On Wednesday, the Dow Jones lost 392 points, or 1.1%, while the S&P 500 lost 1.9% and the Nasdaq Composite slipped 3.3%. For the Nasdaq, this is the worst one-day percentage drop since February 25.

What drives the markets

Markets were rocked on Wednesday by the release of minutes from the Federal Open Market Committee meeting in mid-December, which showed officials not only spoke of faster and more frequent interest rate hikes, but also a more aggressive reduction in its balance sheet by 8900 billion dollars. than the last time he reduced it.

The yield on the 10-year Treasury TMUBMUSD10Y, 1.732% 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 which are highly valued on the promise of high future earnings. The ARK Innovation ETF ARKK, + 0.68%, an indicator of highly speculative technology companies, fell more than 7% on Wednesday and more than 2% on Thursday.

“Growth companies have been the main beneficiaries of extraordinarily low real and nominal interest rates, which have pushed valuations to high levels. As the Fed begins to normalize its policy, it makes sense that these stocks face the strongest headwinds, similar to what we saw on Wednesday. In the US stock market, we continue to have a preference for value stocks over growth stocks, ”said Mark Haefele, investment director for global wealth management at UBS.

Data showed initial jobless claims edged up last week to 207,000, but remained near a 52-week low. Claims increased from 200,000 revised the previous week. Economists polled by the Wall Street Journal expected initial claims to total 195,000 seasonally adjusted in the seven days ended Jan. 1.

The Institute for Supply Management said its services index fell to 62% last month, from a record 69.1% in November. Readings greater than 50% signal expansion and numbers greater than 60% are considered exceptional.

Which companies are targeted? Shares of Bed Bath & Beyond Inc. BBBY, + 8.42%, initially fell in pre-market trading after the retail company reported a surprise third-quarter tax loss and sales that exceeded expectations. But stocks rebounded and rose nearly 15% early in the action. Walgreens Boots Alliance Inc. WBA, -1.08%, shares rose 2.6% after the drugstore retailer reported better than expected first quarter tax results and raised its guidance for the full year. Shares of Constellation Brands Inc. STZ, -1.65%, rose 0.3% after the company reported that its third-quarter net income fell to $ 470.8 million, or $ 2.48 per Class A common share, up from $ 1.28 billion, or $ 6.68 per share a year ago. period How are other assets traded? The ICE US Dollar DXY Index, + 0.01%, a measure of the currency against a basket of six major rivals, was little changed. Oil futures posted strong gains, with the US benchmark CL00 + 2.39% up 2.5% after closing at a six-week high on Wednesday. GC00 gold futures, -1.86% fell 2%. Bitcoin BTCUSD, -1.48% was down 1.6%. The Stoxx Europe 600 SXXP, -1.25% traded down 1.3%, while the London FTSE 100 UKX, -0.88% was down 0.9%. The Shanghai Composite SHCOMP, -0.25% fell 0.3%, while the Hang Seng HSI index, + 0.72% rose 0.7% and Japan’s Nikkei 225 NIK, -2, 88% fell 2.9%.

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