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Wall Street ends sharply lower, hit by bond yields and COVID-19 worries

Stock MarketsMar 18, 2021 05:01PM ET
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© Reuters. FILE PHOTO: A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City

By Noel Randewich

(Reuters) - Wall Street ended sharply lower on Thursday, with the Nasdaq tumbling 3%, hit by rising Treasury yields and fresh worries about the coronavirus pandemic in Europe.

Losses in U.S. stocks accelerated after France's prime minister imposed a month-long lockdown on Paris and several other regions due to the health crisis.

It was the Nasdaq's steepest one-day drop since Feb. 25.

The S&P 500 energy sector index tumbled 4.7% as oil prices fell, in part due to worries about rising COVID-19 cases in Europe.

"That last hit was from news of the Paris lockdown. It wasn't received that well," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "Here in the United States, we anticipate this big reopening and the virus is looking good, but we are not looking outside of the U.S., and it's not all good."

The Russell 1000 value index, which is heavily comprised of cyclical stocks such as financials and energy, lost 0.6%, while the Russell 1000 growth index, which includes technology stocks, dropped more than 2%.

The yield on the benchmark 10-year Treasuries crossed 1.75% to hit a 14-month high a day after the Fed projected the strongest growth in nearly 40 years as the COVID-19 crisis winds down. The Fed also repeated its pledge to keep its target interest rate near zero for years to come..

"The Fed just saying they are not going to raise rates until 2023 really means nothing," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "The Fed is on the sidelines, but if bond yields keep going up, that is what really hurts the economy."

Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) both dropped more than 3%. Tech and other growth stocks are particularly sensitive to rising yields because their value rests heavily on earnings far into the future, which are discounted more deeply when bond yields rise.

A recent $1.9 trillion spending stimulus sparked fears of rising inflation and contributed to the jump in longer-end Treasury yields.

Underscoring the staggered recovery in the labor market, data showed the number of Americans filing for jobless benefits unexpectedly rose last week.

A separate report indicated the Philly Fed business index jumped more than expected, to its highest level since 1973.

The Dow Jones Industrial Average fell 0.46% to end at 32,862.3 points, while the S&P 500 lost 1.48% to 3,915.47.

The Nasdaq Composite dropped 3.02% to 13,116.17.

The S&P 500 and the Dow both closed at record highs on Wednesday.

Accenture (NYSE:ACN) rose 1% after the IT consulting firm raised its full-year revenue forecast and reported second-quarter revenue above analysts' estimates, as more businesses used its digital services to shift operations to the cloud.

Dollar General Corp (NYSE:DG) dropped 4.65% after the retailer forecast annual same-store sales and profit below estimates, indicating that a pandemic-fueled rush for lower-priced goods may be waning faster than expected.

AMC Entertainment (NYSE:AMC) climbed more than 3% after the movie theater operator said it would have 98% of its U.S. locations open from Friday.

Declining issues outnumbered advancing ones on the NYSE by a 3.69-to-1 ratio; on Nasdaq, a 3.42-to-1 ratio favored decliners.

The S&P 500 posted 85 new 52-week highs and no new lows; the Nasdaq Composite recorded 213 new highs and 28 new lows.

Volume on U.S. exchanges was 12.8 billion shares, compared with the 14.2 billion average for the full session over the last 20 trading days.

Wall Street ends sharply lower, hit by bond yields and COVID-19 worries
 

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Comments (14)
RichUncle Pennybags
RichUncle Pennybags Mar 18, 2021 6:36PM ET
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Once again wallstreet hedges take profit and leave everyone as bag holders
ZS Beck
ZS Beck Mar 18, 2021 2:54PM ET
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Nasdaq , Time to meet you makeror your valuation.
RichUncle Pennybags
RichUncle Pennybags Mar 18, 2021 2:45PM ET
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Will you be cashing out for the writeoff?
Billy Bilnaad
Billy Bilnaad Mar 18, 2021 2:45PM ET
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If you cash out now you’re way too late lol
RichUncle Pennybags
RichUncle Pennybags Mar 18, 2021 2:45PM ET
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Billy Bilnaad for next years taxes?
RichUncle Pennybags
RichUncle Pennybags Mar 18, 2021 2:45PM ET
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RichUncle Pennybags or you think it will be going up? I see ws looking for reasons to make it go down.
Robert DeGrandis
messenger Mar 18, 2021 1:33PM ET
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From my perspective, it looks like JPowell is in cahoots with banks to increase their profits while taking back 20%-30% of peoples’ 401Ks. Banks are better equipped to play a no/low risk bond market. This is payback to the banks for the FDIC regulations and the Feds no/low interest rates.
ZS Beck
ZS Beck Mar 18, 2021 1:12PM ET
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Time to mee the Tech valuation.
CHAD TENDIES
CHAD TENDIES Mar 18, 2021 12:28PM ET
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Tesla is heading to 400
Rul Buz
Rul Buz Mar 18, 2021 12:28PM ET
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Millions are buying tesla shares right now and millions are just waiting for a small dip to buy more it will never head to 400 people need to realize that tesla is much more than just an ev company.
Me comment
Me comment Mar 18, 2021 12:19PM ET
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.09% is a real surge alright.
DJ Ryte
DJ Ryte Mar 18, 2021 9:42AM ET
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Racing for the sidelines may be prudent in the short term.
Me comment
Me comment Mar 18, 2021 9:42AM ET
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You run I'll keep making profits on the equity rise. There will be ups and downs but the overall direction is up.
Mike Chen
Mike Chen Mar 18, 2021 9:42AM ET
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Will the stimulus paychecks go to bitcoin instead of equity?
Matt Kay
Matt Kay Mar 18, 2021 9:34AM ET
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Bond prices going down because of weather, yes?
CT OREN
CT OREN Mar 18, 2021 9:33AM ET
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What a good start! We should pray for a black friday tomorrow.
Joyce Yun
Joyce Yun Mar 18, 2021 9:21AM ET
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it seems like a bear trap
Finanically Ruined
Finanically Ruined Mar 18, 2021 7:52AM ET
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Tech bubble go pop
William Smith
William Smith Mar 18, 2021 7:50AM ET
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Bond rate increases are a head fake and will start back down as they slow the economy. Already a record number of pending home sale cancellations this past reporting period.
 
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