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Nasdaq's Worst Day in Nearly 4 Months as Yield Spike Triggers Tech Slump

Stock MarketsFeb 25, 2021 04:04PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The tech-heavy Nasdaq suffered its worst day in nearly four months Thursday, as a sharp spike in U.S. government bond yields on inflation jitters exacerbated fears about high-valued growth sectors and triggered selling across tech.

The Dow Jones Industrial Average fell 1.76%, or 561 points. The S&P 500 was down 2.43%, while the Nasdaq Composite fell 3.52%.

Technology fell 3%, resuming its recent slump after reprieve a day earlier, as the United States 10-Year jumped to a more than one-year high briefly topping 1.6%. Fears about rising inflation muddied the outlook for high-flying growth stocks. But with real rates, which takes into account inflation, still "negative," the overall environment for equities remains supportive, BlackRock (NYSE:BLK)'s Chief Investment Officer of Global Fixed Income, Rick Rieder told CNBC in an interview earlier Thursday.

Investors in growth stocks like tech, with high valuations, usually have to wait longer to recoup their investments, which is unattractive in an inflationary environment, where money today, is worth more than money in the future.

Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) were sharply lower.

Twitter, however, traded against the trend, rising 4% after the social media company set out plans to boost monetizable daily active users to 315 million by 2023 and double revenue in that year.

In a further sign that high-growth stocks have lost their shine, stay-at-home market darlings like Zoom Video Communications (NASDAQ:ZM), Peloton Interactive (NASDAQ:PTON) and DocuSign (NASDAQ:DOCU) were nursing heavy losses, down more than 5% each.

The sharp pace of the uptick in rates has also sparked a jolt of volatility, pointing to underlying investor uncertainty, exacerbated by a renewed short-squeeze in shares of GameStop (NYSE:GME), which ended the session up 19%. The CBOE Volatility Index index, or VIX, jumped 35%.

Consumer stocks were also deeply in the red on disappointing quarterly results, with Best Buy (NYSE:BBY) and Domino’s Pizza (NYSE:DPZ) down 9% and 7%, respectively.

Cyclicals like energy, financials and industrials, which tend to move in tandem with an improving economy, were not spared as recent took some parts of the sector into overbought territory.

On the economic front, initial jobless claims dropped by a more than expected 111,000, to 730,000, while the U.S. fourth-quarter GDP was revised slightly higher to 4.1% from 4%.

Nasdaq's Worst Day in Nearly 4 Months as Yield Spike Triggers Tech Slump
 

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Comments (34)
Viking Fire
Viking Fire Feb 26, 2021 12:25PM ET
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If you have any brains youd be buying like crazy
sebastijan dimitrovski
sebastijan dimitrovski Feb 26, 2021 7:44AM ET
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According to michel burry and bill ackman this is just the beginning. The stock market bubble is not that much of a problem. The overall problem is a huge debt burden that will crash a stock market. The door at the entrance is the same size as at the exit.
Viking Fire
Viking Fire Feb 26, 2021 12:38AM ET
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Not falling for it. Last time they thought this would happen they werent even close to getting it right
Dave Jones
Dave Jones Feb 25, 2021 11:07PM ET
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Yeah I really trust the BlackRock guy!
Jon Jones
Jon Jones Feb 25, 2021 8:57PM ET
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Bond.....James Bond
Joel Schwartz
Joel Schwartz Feb 25, 2021 8:32PM ET
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The FED can’t fight bond yields rising because they’re the reason they’re rising. They overplayed their hand here.
David David
David9 Feb 25, 2021 8:19PM ET
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This is Trump's fault... we need to hold him accountable for this mess that he left...
Kellen Wanasek
Kellen Wanasek Feb 25, 2021 8:19PM ET
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thought it was the biden bull market? or maybe it was the ****of spending congress did. shared accountability, not singular. trump was not smart enough to have a master plan.
David David
David9 Feb 25, 2021 8:12PM ET
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When the market is falling like this, they need to shut it down...
Joel Schwartz
Joel Schwartz Feb 25, 2021 8:12PM ET
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That’s not a free market
Kellen Wanasek
Kellen Wanasek Feb 25, 2021 8:12PM ET
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you must have been long. markets are just like real estate... hedge hedge hedge
Finanically Ruined
Finanically Ruined Feb 25, 2021 8:00PM ET
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Nasdaq to 10k
Francesco Lucchesi
Francesco Lucchesi Feb 25, 2021 7:09PM ET
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let's hope this ridiculous market crashes like 1929
Edward Chong
Edward Chong Feb 25, 2021 7:09PM ET
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it will just correct a little more. u can forget about crash. it will never happen.
Boyoung Schang
Boyoung Schang Feb 25, 2021 7:09PM ET
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What happened in 1929? I don't hope for the market crash, it will hurt a lot of people.
Slimy Chap
Slimy Chap Feb 25, 2021 7:09PM ET
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we won't crash like 1929. but a long grueling bear market that ends with spy below 2000 index points very much possible. right now spy is still in an uptrend. above 50dma
 
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