- US stocks slumped Thursday led by a drop in technology shares.
- The Nasdaq Composite lost more than 2% as investors price in the Fed’s signals to move aggressively against hot inflation.
- JPMorgan and Citigroup will kick off the fourth-quarter earnings season on Friday.
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US stocks closed lower Thursday, let by a sharp downturn in the Nasdaq Composite as tech stocks again bore the brunt of investors’ repricing moves before the Federal Reserve moves more aggressively against hot inflation.
Wall Street’s key indexes had been up earlier in the session, but the gains fizzled. The information technology sector lost the most on the S&P 500 index. Microsoft and Apple weighed on the Dow as well as on the Nasdaq Composite, which snapped a three-day win streak.
The declines took place as investors also prepared for the start of the fourth-quarter earnings season. Big banks including JPMorgan and Citigroup are set to release results on Friday.
Tech stocks have been at the center of a recent slump, after Fed officials signaled they plan to accelerate a drawdown of stimulus measures this year and will begin quickly raising interest rates as inflation sticks at multi-year highs.
Here’s where US indexes stood at 4:00 p.m. on Thursday:
- S&P 500: 4,659.03, down 0.42%
- Dow Jones Industrial Average: 36,113.62, down 0.49% (176.70 points)
- Nasdaq Composite: 14,806.81, down 2.51%
The Nasdaq is in the red so far in 2022 after climbing 21% in 2021. It’s pulled back after benefiting from investors who’ve sold bonds to the Fed and put a sizeable amount of their capital to work in big, stable, and profitable tech companies with high cash flow, Noah Hamman, founder and CEO of AdvisorShares, told Insider on Thursday.
But as earnings season gets into high gear, “I think we’ll start to see a real difference between the companies like Facebook and Apple that do carry that index and other companies that do make up the index but aren’t nearly as profitable, that don’t have the same market share, and maybe won’t benefit as much in a rising interest-rate environment as companies that have hundreds of billions of dollars of cash balances,” he said.
“If the Fed changes its mind,” about the pace of monetary policy, “watch [the Nasdaq] turn around very quickly and shoot straight back up,” Hamman added.
Around the market, Wharton professor Jeremy Siegel said he sees the S&P 500 rising 9% in 2022.
Oil prices could go to $90 per barrel this year on the back of a “triple deficit” for the commodity, says Morgan Stanley.
But on Thursday, crude prices slipped from a two-month high. West Texas Intermediate crude fell 1% to $81.81 per barrel. Brent crude, the international benchmark, fell 0.4%, at $84.16.
Gold edged down 0.4% to $1,820.80 per ounce. The 10-year yield shed 4 basis points, at 1.71%.
Bitcoin lost 2.8% to trade at $42,726.85.