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Nasdaq ends sharply lower after Powell comments

Stock MarketsMar 04, 2021 04:25PM ET
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© Reuters. The Fearless Girl statue is seen outside the NYSE is seen in New York

By Noel Randewich

(Reuters) - Wall Street ended sharply lower on Thursday, leaving the Nasdaq down nearly 10% from its February record high, after remarks from Federal Reserve Chair Jerome Powell disappointed investors worried about rising longer-term U.S. bond yields.

A decline of 10% from its February record high would confirm the Nasdaq is in a correction.

The benchmark 10-year Treasury yield spiked to 1.533% after Powell's comments, which did not point to changes in the Fed's asset purchases to tackle the recent jump in yields. It still held below last week's one-year high of 1.614%.

Some investors had expected the Fed might step up purchases of long-term bonds, helping push down long-term interest rates.

"The market has been worried about the rise in long-term interest rates and the Fed chairman in his commentary didn't really push back towards this increase in rates and the market took it as a signal that yields could rise further, which is what has happened," said Scott Brown, chief economist at Raymond James in Florida.

GRAPHIC-Nasdaq tumbles 10% from February record high - https://graphics.reuters.com/USA-STOCKS/NASDAQ/yxmvjxmanvr/chart.png

In a day of heavy trading on Wall Street, the Nasdaq wiped out all of its year-to-date gains and ended down 9.7% from its record closing high on Feb. 12. The S&P 500 has declined over 4% from its record high close on Feb. 12.

Data showed the number of Americans filing for jobless benefits rose last week, likely boosted by brutal winter storms in the densely populated South, though the labor market outlook is improving amid declining new COVID-19 cases.

The crucial monthly payrolls report is expected on Friday.

Wall Street has been under pressure in recent sessions as a spike in U.S. bond yields hurt valuations of high-flying tech stocks. Stocks expected to thrive as the economy reopens outperformed in recent weeks due to expectations of a new round of fiscal aid and vaccinations.

The S&P 500 energy sector index jumped 2.5% and reached a one-year high on the back of higher oil prices.

The Dow Jones Industrial Average fell 1.11% to end at 30,924.14 points, while the S&P 500 lost 1.34% to 3,768.47.

The Nasdaq Composite dropped 2.11% to 12,723.47.

Volume on U.S. exchanges was 18 billion shares, compared with the 15 billion average for the full session over the last 20 trading days.

Apple Inc (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) Inc and PayPal Holdings Inc (NASDAQ:PYPL) were among the largest drags on the S&P 500. Tesla dropped almost 5%.

Tech stocks are particularly sensitive to rising yields because their value rests heavily on future earnings, which are discounted more deeply when bond returns go up.

"Valuations are at the high end of historic ranges, so you are seeing selling, especially in the higher valuation areas like the Nasdaq and tech general," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

Declining issues outnumbered advancing ones on the NYSE by a 3.79-to-1 ratio; on Nasdaq, a 5.62-to-1 ratio favored decliners.

The S&P 500 posted 28 new 52-week highs and no new lows; the Nasdaq Composite recorded 173 new highs and 151 new lows.

Nasdaq ends sharply lower after Powell comments
 

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Comments (16)
Stacy Starner
Stacy Starner Mar 05, 2021 1:51AM ET
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Quit giving other countries money and printing it
M CAPITAL INC
KUNGFU_PANDA Mar 04, 2021 5:10PM ET
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powell always same ****?
Stacy Starner
Stacy Starner Mar 04, 2021 5:10PM ET
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Garbage
M CAPITAL INC
KUNGFU_PANDA Mar 04, 2021 5:09PM ET
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Asia and Europe short too badly ?
Stratus Angelacus
Stratus Angelacus Mar 04, 2021 4:30PM ET
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The Fed is lending credit to the government like its going out of style. Over 3.1 trillions already in one year. Long term bond rates could k/ILL. the goose that laid the golden eggs , by raising mortgage rates and stifling the housing market.
MK MK
MK MK Mar 04, 2021 4:17PM ET
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Silly sheeps. USA have no possibility to raise rates. All they can do is printing usd. Clear manipulation before another dose
TR Ko
TR Ko Mar 04, 2021 3:01PM ET
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The problem today was Powell didn’t talk about making permanent or extending SLR. Yes it isn’t done until March 17th. But the money wanted a comment on it today. He is being asked by Top democrats to not extend it. It was huge for the market today. Notice as he was on the conference with no word of SLR is when the bottom fell out again.
Wrestle Mania
Wrestle Mania Mar 04, 2021 1:51PM ET
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likely to convert iñvestment in power sector for balance portfolio
Wrestle Mania
Wrestle Mania Mar 04, 2021 1:51PM ET
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likely to convert iñvestment in power sector for balance portfolio
yanjuan Qian
yanjuan Qian Mar 04, 2021 1:46PM ET
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We need safety life
Mark Jannetty
Mark Jannetty Mar 04, 2021 1:44PM ET
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we need Trump!!!
Jacob Steinschlag
Jacob Steinschlag Mar 04, 2021 1:44PM ET
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we need you to see a mental health doctor
Dr Mark Hollands
Dr Mark Hollands Mar 04, 2021 1:28PM ET
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Institutions are taking profits. That's why planforms like plas500, webull, robinhood and etoro are not accessible at the moment
Dr Mark Hollands
Dr Mark Hollands Mar 04, 2021 1:28PM ET
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Nasty!
Dietmar Stahl
Dietmar Stahl Mar 04, 2021 1:02PM ET
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March 4 will be the new fools day
Matt Kay
Matt Kay Mar 04, 2021 12:52PM ET
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these "analysts" know absolutely zero
Viking Fire
Viking Fire Mar 04, 2021 11:30AM ET
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Institutionally wide greed profit harvesting. Should be ashamed
Cal Lowe
Cal Lowe Mar 04, 2021 10:42AM ET
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So whats the latest on Powell?
Dick Philip K
Dick Philip K Mar 04, 2021 10:42AM ET
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Same concern here
Dave Jones
Dave Jones Mar 04, 2021 9:39AM ET
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Rubbish it spiked up
Nathan Thurai
Nathan Mar 04, 2021 9:39AM ET
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Not too fast, all crashing now..
 
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