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relates to Hedge Funds Make Biggest Short Bet on Junk Bonds Since 2008 relates to Qatar Central Bankers Must Reveal Emails Over Blockade Response relates to Faang Rout Is Reconsidered After Jobs Data: Wall Street Reacts relates to Kashkari Has ‘Zero Sympathy’ for Wall Street Critics of Fed relates to Goldman, Pimco Detect Irrational Inflation Mania in Bonds relates to Bond Fund That Changed Its Ticker to BTC Is Now Switching Back relates to Europe’s Banks Cash In on Lagarde’s Billion-Euro Loan Sweetener relates to Lagarde Says ECB Policy Has Alleviated, Not Deepened Inequality relates to HDFC to Raise $17 Billion in Bonds After Profit Beats Estimates relates to Stocks Climb as Jobs Surprise Curbs Rotation Trade: Markets Wrap
relates to Hedge Funds Make Biggest Short Bet on Junk Bonds Since 2008 relates to Qatar Central Bankers Must Reveal Emails Over Blockade Response relates to Faang Rout Is Reconsidered After Jobs Data: Wall Street Reacts relates to Kashkari Has ‘Zero Sympathy’ for Wall Street Critics of Fed relates to Goldman, Pimco Detect Irrational Inflation Mania in Bonds relates to Bond Fund That Changed Its Ticker to BTC Is Now Switching Back relates to Europe’s Banks Cash In on Lagarde’s Billion-Euro Loan Sweetener relates to Lagarde Says ECB Policy Has Alleviated, Not Deepened Inequality relates to HDFC to Raise $17 Billion in Bonds After Profit Beats Estimates
Markets

Tech Selloff Sweeps Across Stocks; Dollar Climbs: Markets Wrap

Updated on
  • Apple, Tesla, Amazon.com pace slide in megacap companies
  • Yellen says she is not predicting or recommending rate hikes
Yellen Says Rates May Rise to Prevent Overheating

Volatility gripped financial markets as a rout in some of the largest tech companies dragged down stocks. The dollar rose.

Megacaps such Apple Inc., Tesla Inc. and Amazon.com Inc. sent the Nasdaq 100 slumping, while the S&P 500 pared losses amid gains in commodity, financial and industrial shares. Treasury Secretary Janet Yellen rattled markets with a comment economists regarded as self evident -- that rates will likely rise as government spending ramps up and the economy responds with faster growth. Later in the day, Yellen said she wasn’t predicting or recommending rate hikes.

The debate on whether government spending could boost inflation comes at a time when stock valuations are hovering near the highest levels in two decades. Hedge funds have been bailing from equities at a pace not seen since the financial crisis, while shares have struggled to gain traction despite blowout corporate earnings.

Nasdaq indexes both suffer worst day since March

“We’ve had this spectacular run-up, and I think we’ve seen momentum just run out of steam,” said Fiona Cincotta, senior financial markets analyst at City Index. “Despite earnings being encouraging, they haven’t managed to push those indices higher. Moving out of growth and into cyclicals is the place we’re going to have more movement.”

Earlier Tuesday, a sharp drop in equity futures left traders scrambling for an explanation. Some of them speculated on military tensions between China and Taiwan, Singapore’s tougher coronavirus restrictions and Ferrari NV’s decision to postpone financial targets.

Investors also monitored the latest economic readings, with the U.S. trade deficit widening to a new record in March. Meanwhile, a senior White House economic aide demurred on the question of whether President Joe Biden will nominate Fed Chair Jerome Powell for a second four-year term, saying the decision on selecting the next central bank chief will come after a thorough “process.”

Treasury Secretary Janet Yellen said spending may spur modest rate hikes.

Source: Bloomberg

Here are some key events to watch this week:

  • U.S. ADP employment change is due Wednesday
  • Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College on Wednesday. Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club
  • Bank of England rate decision Thursday
  • The April U.S. employment report is released on Friday

For more markets updates see the MLIV <GO> blog.

These are some of the main moves in markets:

Stocks

  • The S&P 500 fell 0.7% as of 4 p.m. New York time
  • The Nasdaq 100 fell 1.85%
  • The Dow Jones Industrial Average was little changed
  • The MSCI World index fell 0.8%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.4% to $1.2017
  • The British pound fell 0.2% to $1.3887
  • The Japanese yen fell 0.2% to 109.29 per dollar

Bonds

  • The yield on 10-year Treasuries declined one basis point to 1.58%
  • Germany’s 10-year yield declined three basis points to -0.24%
  • Britain’s 10-year yield declined five basis points to 0.79%

Commodities

  • West Texas Intermediate crude rose 2.3% to $66 a barrel
  • Gold futures fell 0.7% to $1,779 an ounce

— With assistance by Andreea Papuc, Yakob Peterseil, Vildana Hajric, Kamaron Leach, Sophie Caronello, and Nancy Moran