NASDAQ Plunges 3% as 10-Year Yield Crosses 1.7%

Just when you thought the Fed had soothed the jittery mind of investors in its recent statement, bond yields surged again on Thursday and kicked the legs out from under the tech space.

The NASDAQ plunged 3.02% (or nearly 410 points) to 13,116.17, which snapped a three-day win streak and puts it down 1.6% for the week heading into Friday. The last time this index dipped by more than 3% was February 25 when it plunged over 3.5%.

All of the FAANGs were sharply lower (as you’d expect), especially declines of more than 3% each for Netflix (NASDAQ:NFLX), Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL). Furthermore, Tesla (NASDAQ:TSLA) dipped 6.9% and Microsoft (NASDAQ:MSFT) slumped nearly 2.7%.

The S&P was off 1.48% today to 3915.46. The Dow reached an intraday high earlier, but reversed course and ultimately ended lower by 0.46% (or around 150 points) to 32,862.30. Both of these indices are coming down from record highs set on Wednesday.

The S&P is now in the red by 0.7% for this week heading into Friday, but the Dow is up 0.3% over the four days.

If the market flipped out when the 10-year Treasury yield moved above 1.6% earlier this year, then it’s certainly going to react when it soars to 1.75% like it did today. It pulled back from that high, but still finished over 1.7% on Thursday.

The move comes a day after a close-to-perfect Fed statement, in which the Committee sharply raised its growth forecast for 2021 but said there’ll probably be no rate hikes through 2023. And they’re going to give inflation more latitude before making any change to policy.

Adding to today’s pressure was a disappointing jobless claims report, which rose to 770,000 last week. The result wasn’t even in the same neighborhood as expectations at only 700K. It was also more than the previous result of 725K, which was revised up from 712K.

Today's Portfolio Highlights:

Headline Trader: These days, everybody is spending on data center expansion to capitalize on the “4th Industrial Revolution”. And they’re spending BIG money! For example, a large portion of Alphabet’s (GOOG) $7 billion capital expenditures this year will be going to data centers, which is fabulous news for Equinix (NASDAQ:EQIX). It’s the world’s largest data center REIT and has the highest-quality portfolio of network-dense assets. Best of all, approximately 45% of Google (NASDAQ:GOOGL) Cloud’s onramps are already at one of EQIX’s global locations. The stock pulled back recently on a lower-than-expected forward guidance, so Dan sees an amazing opportunity to pick up a name that’s in one of the market’s sweetest spots. This addition is a play on the economic rebound and the necessity to leverage digital technology as the digital office space continues to grow. Read the full write-up for a lot more on this new addition.

Technology Innovators: A dip in shares of Amkor Technology (NASDAQ:AMKR) is giving Brian an opportunity to pick up this chip name at a great price. This Zacks Rank #1 (Strong Buy) is a leading provider of semiconductor packaging and test services. The company has beaten the Zacks Consensus Estimate in each of the last four quarters with an impressive average surprise of 359% over that time. Furthermore, the editor considers AMKR to be “a winner based on valuation alone” given its 13x forward PE and price to book of 2.5x. The portfolio also sold the underperforming C3.ai (AI) position. The full write-up has more on today’s moves.

Counterstrike: The NASDAQ is certainly “having some issues” today, which prompted Jeremy to put on a hedge and reduce some risk on Thursday. He added a 5% allocation in ProShares UltraPro Short QQQ (SQQQ), while selling Anaplan (NYSE:PLAN) and Zillow Group (NASDAQ:ZG) for losses. Read the full write-up for more on today’s moves, including why the editor thinks a 200-day test might be in the works for the NASDAQ. In other news, this portfolio had a top performer today as its short position in The RealReal (NASDAQ:REAL) advanced approximately 6.5%.

TAZR Trader: The NASDAQ is struggling with resistance, so Kevin decided to take some big profits off the table in three positions. He sold Novavax (NASDAQ:NVAX) for a 37.5% return in just two weeks and Magnite (MGNI) for 24.5% in about the same amount of time. The editor also cut half of Square (SQ) for 17.4% in about four months. Learn more about these moves in the full write-up.

Commodity Innovators: Tight supply issues for palladium has Jeremy thinking that this commodity will continue moving higher. Therefore, he added Aberdeen Standard Physical Palladium Shares ETF (PALL) on Thursday, while also selling UFP Industries (UFPI) for a nice 25.9% return. The editor sees PALL as a long-term holding. Read the full write-up for more.

Zacks Short Sell List: This portfolio was made for difficult days like this, so it’s no surprise that it had four of the top five winners in a session when the S&P plunged more than 1.4%. Those strong performances on Thursday came from short positions in Ceridian HCM Holding (NYSE:CDAY, +7.1%), Twitter (TWTR, +4.8%), Teradata (NYSE:TDC, +4.7%) and Shopify (NYSE:SHOP, +4.4%). Learn more about this emotion-free portfolio that takes advantage of falling and volatile markets by reading the Short Sell List Trader Guide.

All the Best,
Jim Giaquinto