Stocks Decline as Selloff in Tech Shares Deepens: Markets Wrap

Stocks Decline as Selloff in Tech Shares Deepens: Markets Wrap
Vildana Hajric and Emily Graffeo
·4 min read

(Bloomberg) -- U.S. shares fell as the technology sector extended losses, with rising Treasury yields damping the outlook for growth stocks.

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The S&P 500 dropped for a third day, with gains in energy and financial stocks buttressing the decline. The tech-heavy Nasdaq 100, on the other hand, slid more than 1%, extending Monday’s last-hour selloff. The 10-year Treasury yield rose to near a one-month high. A currency crisis deepened in Turkey, with the lira weakening past 13 per U.S. dollar. Zoom Video Communications Inc. tumbled 18% on slowing growth.

Traders pruned bets for a dovish-for-longer Federal Reserve after Jerome Powell was selected for a second term. The chair himself sought to strike a balance in his policy approach saying the central bank would use tools at its disposal to support the economy as well as to prevent inflation from becoming entrenched.

Read: High Flyers Look Out, Your Biggest Enemy Is Back: Tech Watch

“Looking at the market today, obviously things that are sensitive to rates” are moving, Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said by phone. “Tech is showing a little bit of weakness, financials are showing strength. That’s reflective of that move in the yield curve.”

The dollar traded at its highest level since September 2020. The Japanese yen fell past 115 per dollar for the first time since 2017.

Fed Bank of Atlanta President Raphael Bostic said Monday the U.S. central bank may need to speed up the removal of monetary stimulus and allow for an earlier-than-planned increase in interest rates.

Despite recent declines, U.S. stocks have been trading near records, giving rise to concerns about valuation as investors weigh prospects for growth amid rising inflation and a persistent pandemic.

“The market is still overbought and needs to digest some of the recent gains,” Sam Stovall, chief investment strategist at CFRA Research, said by phone.

Read: Anti-ARKK ETF Shines as Spiking Yields Drag Down Expensive Tech

Turkey’s lira sank the most in the world, reaching yet another record low, after President Recep Tayyip Erdogan defended his pursuit of lower interest rates to boost economic growth and job creation. His unorthodox view that higher rates fuel inflation has sent the currency down for nine successive years, spurring a 43% plunge in 2021 alone.

Zoom Video dropped as analysts including from Citigroup Inc. said slowing incremental growth and the lowest new-customer additions in three years were concerning. Urban Outfitters Inc. tumbled 13% as supply-chain disruptions and pressure from higher costs weighed on third-quarter results.

Oil futures in New York rebounded. The U.S. will release 50 million barrels of crude from its strategic reserves in concert with China, Japan, India and South Korea and the U.K -- an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices that could prompt a backlash by OPEC+.

Iron ore extended a rebound from an 18-month low on bets stronger-than-expected steel output cuts so far this year mean China’s steel mills are primed to lift volumes next month.

For more market analysis, read our MLIV blog.

Here are some key events this week:

  • Reserve Bank of New Zealand rate decision Wednesday

  • U.S. FOMC minutes, consumer income, wholesale inventories, new home sales, GDP, initial jobless claims, U.S. durable goods, University of Michigan consumer sentiment. All Wednesday

  • Bank of Korea policy decision Thursday

  • U.S. Thanksgiving Day: U.S. equity, bond markets closed Thursday

  • Bank of England Governor Andrew Bailey speaks with Mohamed El Erian at a Cambridge Union event. Thursday

Some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.3% as of 12:22 p.m. New York time

  • The Nasdaq 100 fell 1%

  • The Dow Jones Industrial Average was little changed

  • The MSCI World index fell 0.5%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2% to $1.1265

  • The British pound was little changed at $1.3384

  • The Japanese yen was little changed at 114.94 per dollar

Bonds

  • The yield on 10-year Treasuries advanced three basis points to 1.65%

  • Germany’s 10-year yield advanced eight basis points to -0.22%

  • Britain’s 10-year yield advanced six basis points to 1.00%

Commodities

  • West Texas Intermediate crude rose 1.9% to $78.18 a barrel

  • Gold futures fell 1.2% to $1,787.10 an ounce

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