Tech stocks weigh on S&P 500, Nasdaq with Fed on deck

By: |
March 17, 2021 10:11 PM

The Fed is expected to issue a blowout GDP forecast for 2021 at the end of a two-day meeting on Wednesday at 2 p.m. ET (1800 GMT).

US stocksThe S&P 500 posted 18 new 52-week highs and no new low, while the Nasdaq recorded 88 new highs and 48 new lows.

The S&P 500 and the Nasdaq dropped on Wednesday as U.S. bond yields spiked ahead of the Federal Reserve’s policy statement which could provide hints on whether the central bank would raise interest rates sooner than expected.

The benchmark 10-year yield ticked up to a new 13-month high of 1.676%, denting demand for some high-growth technology stocks and pressuring the Nasdaq by about 1%.Fears that $1.9 trillion dollar stimulus would overheat the economy have triggered a rapid spike in long-duration Treasury yields, derailing Wall Street’s main indexes from their peaks last month.

The Fed is expected to issue a blowout GDP forecast for 2021 at the end of a two-day meeting on Wednesday at 2 p.m. ET (1800 GMT). The meet will be followed by Fed Chair Jerome Powell’s news conference, where he is likely to reassure the economy can take off without generating excessive inflation.

While the Fed has reiterated it will remain dovish till the labor market fully recovers, eurodollar futures, which track short-term rate expectations, have priced a 90% chance of a rate hike by December 2022, with three hikes seen in 2023.

“Fed is more willing to allow inflation to run hot at the same time it wants to bond markets to not run past the current level,” said Sam Stovall, chief investment strategist at CFRA Research in New York.”If the Fed hints they would buy bonds at the longer end of the (Treasury yield) curve, it would help equities rally.”The S&P 500 and the Dow on Monday reached all-time closing highs while the Nasdaq has recovered more than half of its losses since confirming a correction last week on optimism over the latest round of fiscal stimulus and vaccinations.

At 11:46 a.m. ET, the Dow Jones Industrial Average rose 90.98 points, or 0.28%, to 32,916.93, the S&P 500 lost 19.84 points, or 0.50%, to 3,942.87 and the Nasdaq Composite lost 176.93 points, or 1.31%, to 13,294.64.Apple Inc, Netflix Inc and Microsoft Corp slipped between 1.4% and 2.2% in a continuation of a rotation out of high-flying companies into last year’s laggards including financials, industrials and materials.

The banks index and airlines, expected to benefit from a reopening economy, added more than 1%.”The play is value … as the economy picks up, there is a lot more leverage in earnings growth for cyclical companies,” said Eric Diton, president and managing director of the Wealth Alliance in New York.

Fast-food retailer McDonald’s gained nearly 1.5% after Deutsche Bank raised its target price on the stock and also upgraded its recommendation to “buy” from “hold”.

Declining issues outnumbered advancers by a 1.8-to-1 ratio on the NYSE and by a 1.9-to-1 ratio on the Nasdaq. The S&P 500 posted 18 new 52-week highs and no new low, while the Nasdaq recorded 88 new highs and 48 new lows.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Gold prices edge higher, follow international market; check MCX gold resistance, support levels
2Petrol and diesel price today 23 April 2021: Fuel cost steady for 8th day; check prices in Mumbai, Delhi here
3SGX Nifty down 75 pts, Sensex, Nifty stare at gap-down start; 5 things to know before market opens