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

Published 02/25/2021, 03:39 PM
Updated 02/25/2021, 04:04 PM
© Reuters.

© 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%.

Latest comments

If you have any brains youd be buying like crazy
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.
Not falling for it. Last time they thought this would happen they werent even close to getting it right
Yeah I really trust the BlackRock guy!
Bond.....James Bond
The FED can’t fight bond yields rising because they’re the reason they’re rising. They overplayed their hand here.
This is Trump's fault... we need to hold him accountable for this mess that he left...
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.
When the market is falling like this, they need to shut it down...
That’s not a free market
you must have been long. markets are just like real estate... hedge hedge hedge
Nasdaq to 10k
let's hope this ridiculous market crashes like 1929
it will just correct a little more. u can forget about crash. it will never happen.
What happened in 1929? I don't hope for the market crash, it will hurt a lot of people.
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
Physcial Silver, gold , and BTC. Protect your wealth.
I sold my gold to buy silver. Is it a smart move? I don't have cash to buy both:( I have a little bit of bitcoin. I believe in Bitcoin-decentralized banking, sounds good to me.
Not good enough. Hope the market can drop more. Let’s pray for a market crash on friday.
Market correction was just made for the first day after rising for 4 straight months.
Green tomorrow. Stimulus bill will be signed tomorrow.
Wrong. Bull market will continue for 2 years at least.
spoken like a short whos been getting smoked all year. best bull year we have seen in a looooonnnggg time coming boys!
ugly short
and next month this Bond story will be forgotten
Biden stock market bump.lol
Yeah, I know, I know, it’s time to play bonds yield (sell bonds) story to scare the equilty market, on one hand, and to the point profitable enough to use the bond money to buy some cheap stocks. What do you expect Wall Street eat on?
you ain't seen nothing yet
Make American penniless. Great Joe Biden.
If youre blaming President Biden for this immediate downturn and show you have knowledge of how investing works. Things are going back to normal, which means money transferring from speculative to conservative investments. Blaming a new president for you losing money means your are really bad at this...
wow excellent assessment, i know how it works uh?
 So you like the president who is an authoritarian, rarely answers questions, Media worship Joe Biden like a Saint.They don't ask any hard questions. Joe Biden wants the military and the wire fence walls to protect the White House. Really!? that's the leader you want?? Oh! that's right- Walls are unethical and racist to people who want on the borders but It's perfectly fine for me.
Looks like a duplicate chart of 87 crash! If tomorrow and Monday are down big. Tuesday will be down 10% !
A senile fool on top of quota-filled administration. What can go wrong?
how's twitter say they are going to boost monitizable active daily users when it is losing them hand over fist?
tech will benefit from higher rates. most are flush with cash
can the U.S government start buying back their dollar Bill's please
It's a market correction not crash... Anything above 20% is a crash starter... Happy hoarding... Great bargains about...
You are my kind of guy!
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