U.S. stocks closed sharply lower, led by a huge selloff in tech stocks as the Nasdaq snapped its three-day winning streak after rising interest rate worries once again dented investors’ spirits. All the three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) shed 0.5% or 176.70 points to close at 36,113.62.
The S&P 500 declined 1.4% or 67.32 points to end at 4,659.03 points. Tech and consumer discretionary stocks were the worst performers.
The Technology Select Sector SPDR (XLK) declined 2.6%, while the Consumer Discretionary Select Sector SPDR (XLY) lost 2%. Eight of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq was the worst performer falling 2.5% or 381.58 points to finish at 14,806.81 points.
Big tech stocks were the biggest losers, with shares of Amazon.com, Inc.
AMZN
and Microsoft Corporation
MSFT
declining 2.4% and 4.2%, respectively. Amazon has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
The fear-gauge CBOE Volatility Index (VIX) was up 15.27% to 20.31. A total of 10.43 billion shares were traded on Thursday, higher than the last 20-session average of 10.39 billion. Decliners outnumbered advancers on the NYSE by a 1.27-to-1 ratio. On Nasdaq, a 2.24 to-1 ratio favored declining issues.
Tech Stocks Take a Beating Again
Tech stocks feel on Thursday, snapping their three-day winning streak. This has been the trend since the beginning of the year as rising interest rates have been pushing the 10-year Treasury yield higher.
Growth shares, especially tech stocks, are more sensitive to interest rates have been taking a beating since the beginning of 2022 as investors have been worrying that the Fed will be more aggressive toward hiking rates in the coming months than expected in order to tackle the surging inflation. These worries once again halted the tech rally, leading to massive selloff. Shares of Tesla, Inc.
TSLA
declined 6.8%, while Meta Platforms, Inc.
FB
fell 2%.
Moreover, on Thursday several Fed officials spoke publicly about rising inflation and the need for rate hikes to tackle the situation. There were also reports that the Fed could start raising rates as soon as from March, which further took a toll on the high-flying tech stocks.
Economic Data
Markets hardly had an impact on the economic reports released on Thursday. In economic reports released on Thursday, the producer-price index for December showed that inflation at the wholesale level 9.7% year over year after rising 9.8% in November. On a monthly basis it rose 0.2%, which is the lowest in more than a year.
The Labor Department said on Thursday that initial jobless claims rose to 230,000, increasing 23,000 for the week ending Jan 8. The four-week moving average also rose to 210,750, an increase of 6,250 from the previous week’s unrevised average of 204,500.
However, continuing claims fell by 194,000 to 1,559,000. The previous week’s numbers were revised down by 1,000 from 1,754,000 to 1,753,000. The 4-week moving average came in at 1,721,500, a decline of 77,000 from the previous week’s revised average.
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