Big Tech stocks got hammered Thursday, the losses building up as the day wore on.
The reality of the Fed’s decision to cut back its bond buying faster finally set in.
The tech-heavy Nasdaq Composite went into a tailspin with about an hour left in the trading day. By the time the bell rang, the index had dropped 2.5%.
Things weren’t quite so bad for the S&P 500 and the
Dow Jones Industrial Average.
The S&P 500 slipped 0.9% and the Dow, which spent most of the day in the green, fell 30 points, or 0.1%. By late afternoon, losses in Apple (AAPL) and Microsoft (MSFT) worsened, with both losing more than 2.9%, which weighed on the Dow.
The indexes shot up Wednesday afternoon after the Fed announced that it would end its bond-buying program by March, and signaled it might raise interest rates three times by the end of next year.
For now, less liquidity flowing through markets makes investors less willing to place fairly risky bets on high-valuation companies that are looking for innovations to produce sizable profits many years down the line.
(NVDA) saw their stocks dive between 2.3% and 6.8% on Thursday. The
Exchange-Traded Fund (ARKK) has now fallen about 11% since Dec. 8.
Increases in short-term interest rates would combat persistently high inflation. That could slow down economic growth—and indeed—the largely economically sensitive Dow is still below its all-time high hit Nov. 8.
The central bank action didn’t stop there. On Thursday, the Bank of England raised interest its benchmark interest rate to 0.25%, from 0.1%. The European Central Bank left rates at minus 0.5%, but reduced the amount of bonds it would buy.
While the bank moves could be a snag for many stocks, many were performing well. Just over half of stocks on the S&P 500 rose, according to FactSet. The majority of U.S. stocks had already been in decline for an extended time, reflecting uncertainty around Fed policy changes.
On the labor front, initial jobless claims rose to 206,000, above forecasts for 200,000, but the four-week average fell to 203,750, the lowest since March 2020. That report does little to change the Fed narrative.
The broad stock market optimism extended to Asian and European investors. The
index ended the day up 0.8% with Hong Kong’s
Hang Seng Index
gaining 0.2%. Japan’s
was up 2.1%. The pan-European Stoxx 600 index was up 1.2%.
Here are 6 stocks on the move :
Accenture (ACN) gained 6.6% after beating earnings forecasts and raising its full-year guidance.
Adobe (ADBE) dropped 10% after its earnings only met analyst forecasts, while its 2022 guidance came in below expectations.
DocuSign (DOCU) fell 0.7% after getting cut to Equal Weight from Overweight at Morgan Stanley.
(T) gained 7% after getting upgraded to Overweight from Equal Weight at Morgan Stanley.
(REGN) dipped 4% after a study showed its Covid antibody doesn’t work as well against Omicron.
Delta Air Lines
(DAL) gained 2.2% after it promised “meaningful profitability” in 2022 at its investor day.