A rally in big tech fizzled out as bond yields rose, with traders wading through remarks from a slew of Federal Reserve officials and awaiting Jerome Powell’s speech on Friday for clues on the outlook for interest rates.
(Bloomberg) — A rally in big tech fizzled out as bond yields rose, with traders wading through remarks from a slew of Federal Reserve officials and awaiting Jerome Powell’s speech on Friday for clues on the outlook for interest rates.
The S&P 500 erased gains, while the Nasdaq 100 fell about 1.5%. The megacap space came under pressure, with Tesla Inc. and Apple Inc. each dropping at least 1.8%. Nvidia Corp. trimmed most of an advance that sent the chipmaker to an all-time high.
“It’s sort of like sell the news,” said Max Wasserman, founder of Miramar Capital. “Nvidia had great numbers, blow away numbers, but the market already reflected that. Investors may be realizing that we’ve had such a big run in the market, so let’s take a little profit before the Fed throws cold water on it. And if it doesn’t, they’ll come right back in.”
Traders are also keeping a close eye on the annual gathering of top central bankers in Jackson Hole, Wyoming — where Powell is scheduled to deliver a speech at 10:05 a.m. Washington time Friday. The Fed chief will likely use his platform to outline how officials will assess whether rates should go higher and determine when it’s time to start cutting them.
In the run-up to Powell’s address, Fed Bank of Boston President Susan Collins told Yahoo! Finance that rate increases may be necessary, adding that she wasn’t prepared to signal the peak point. Meantime, her Philadelphia counterpart Patrick Harker sees interest rates on hold for the rest of this year, and thinks policymakers have likely undertaken sufficient tightening, telling CNBC that “we’ve probably done enough.”
Speaking earlier in an interview on Bloomberg Television, former St. Louis Fed President James Bullard said a pickup in economic activity this summer could delay plans for the Fed to wrap up interest-rate increases.
Treasury two-year yields, which are more sensitive to imminent policy moves, hovered near 5%. The dollar rose against all of its developed-market peers.
Corporate Highlights
- Boeing Co. and its biggest supplier, Spirit AeroSystems Holdings Inc., fell after the planemaker disclosed improperly drilled holes in a component that helps maintain cabin pressure within the 737 Max jet.
- Snowflake Inc. sank after giving a sales outlook for the current quarter in line with expectations, suggesting that companies are still cautious about expanding their cloud software budgets.
- Dollar Tree Inc. slipped as its earnings forecast fell short of analyst estimates as the company contends with challenges such as higher wages and a less profitable sales mix, one year after introducing a higher price point.
- T-Mobile USA Inc. is cutting 7% of its staff, part of an effort to rein in costs as the company spends heavily to attract new subscribers in an increasingly competitive market.
Key events this week:
- Japan Tokyo CPI, Friday
- US University of Michigan consumer sentiment, Friday
- Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.7% as of 12:09 p.m. New York time
- The Nasdaq 100 fell 1.4%
- The Dow Jones Industrial Average fell 0.5%
- The Stoxx Europe 600 fell 0.4%
- The MSCI World index fell 0.5%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0826
- The British pound fell 0.7% to $1.2634
- The Japanese yen fell 0.7% to 145.79 per dollar
Cryptocurrencies
- Bitcoin fell 2% to $26,051.7
- Ether fell 2.3% to $1,645.56
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.22%
- Germany’s 10-year yield was little changed at 2.51%
- Britain’s 10-year yield declined four basis points to 4.43%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures were little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson, John Viljoen, Namitha Jagadeesh, Sagarika Jaisinghani, Vildana Hajric and Isabelle Lee.
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