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Source: Copyright © 2021 Kalkine Media Pty Ltd.
Summary
- S&P 500 was down 1.34%, Dow Jones shed 1.11%, and NASDAQ plunged 2.11%.
- Ten-year treasury bond yields were up 5.33% to 1.548 on Thursday.
- The 30-year mortgage rates rose more than 3% for the first time since July.
US stocks ended lower for a third-straight day on Thursday after the Federal Reserve Chairman Jerome Powell commented that the economy would take more time to heal and mortgage rates rose over 3% for the first time since July, making borrowings expensive for new homebuyers.
The S&P 500 was down 1.34% to 3768.47. The Dow Jones Industrial Average was down 1.11% to 30924.1. The NASDAQ Composite Index dropped 2.11% to 12723.47, and the small-cap Russell 2000 shed 2.76% to 2146.92.
Investors seemed worried after the Fed Chairman restated his earlier position that the economy is far from achieving full employment of the pre-pandemic era and it may take longer to rebound. His statement contradicted the optimistic forecast of some latest economic data relayed by officials. Also, Mr. Powell’s views on inflation and rising bond yields did little to mitigate investors’ concerns.
The rise in 10-year US Treasury bond yields has been a major area of concern among investors and policy analysts who believe that it may lead to higher inflation and market volatility, both are damaging to the stock markets. The 10-year bond yields surged 3.67% to 1.467 on Wednesday.
Federal Reserve Governor Lael Brainard assured this week that the bank would maintain an easy monetary policy to spur growth but ruled out any short-term measures for bond market volatility. She remained positive that the rising bold yield is a sign of an economic rebound. Her positive comments, however, have failed to lift the investors’ sentiment.
Markets were also taking note of the rising mortgage rates in recent days. The rates for 30-year mortgages rose more than 3% for the first time since July, making borrowings expensive. It has been rising for the fifth consecutive weeks, according to an industry estimate. New homebuyers would find it difficult to purchase now as compared to 2020 when the rates were low.
The rise in bond yield and mortgage rates also correspond to the theory that markets remained optimistic about a faster recovery with increased government spending on COVID relief.
Most sectors underperformed on Thursday, including utilities, real estate, consumer non-cyclicals, financials, technology, healthcare, industrials, consumer cyclicals, and basic materials.
Pic Credit: Pixabay.
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Top Gainers
Top performers on S&P 500 included Diamondback Energy Inc (9.16%), EOG Resources Inc (6.63%), Marathon Oil Corp (6.28%), and APA Corp (US) (5.37%). On NASDAQ, top performers were Five Prime Therapeutics Inc (78.74%), Super League Gaming, Inc. (69.29%), Allied Esports Entertainment Inc (30.80%), and Severn Bancorp Inc (27.69%). On Dow Jones, Chevron Corp (0.84%), UnitedHealth Group Inc (0.28%), American Express Co (0.06%), and Walmart Inc (-0.05%) were among the leaders.
Top Losers
Top laggards on S&P 500 included Tyler Technologies Inc (-13.58%), Western Digital Corp (-8.87%), Monolithic Power Systems Inc (-7.56%), and Enphase Energy Inc (-6.98%). On NASDAQ, Dixie Group Inc (-40.66%), BioVie Inc (-38.73%), AppHarvest Inc (-34.35%), and Purple Innovation Inc (-32.59%). were the losers. On Dow Jones, Intel Corp (-2.62%), Home Depot Inc (-2.50%), Walt Disney Co (-2.20%), and Johnson & Johnson (-2.02%) were among the laggards.
Image Source: Refinitiv, NASDAQ 1Y price chart, March 4, 2021.
Volume Movers
Top volume movers included Apple Inc (38.68mn), General Electric Co(23.23mn), Bank of America Corp (18.99mn), Microsoft Corp (15.39mn), Advanced Micro Devices Inc (14.55mn), American Airlines Group Inc (14.30mn), Ford Motor Co (14.19mn), Intel Corp (12.71mn), Cisco Systems Inc (8.42mn), Coca-Cola Co (5.97mn), Super League Gaming, Inc. (29.65mn), Sundial Growers Inc (22.22mn), Genius Brands International Inc (16.85mn), and Castor Maritime Inc (16.00mn).
Futures & Commodities
Gold futures were down 1.05% to $1,697.80 per ounce, silver prices plunged 3.57% to $25.445 per ounce, and copper was down 4.82% to $3.9425.
Brent oil futures surged 4.67% to $67.06 and WTI crude gained 4.50% to $64.04 per barrel.
Bond Market
The 30-year treasury bond yields were up 2.61% to 2.310, while the 10-year bond yields were up 5.33% to 1.548.
US Dollar Futures Index was up 0.75% to 91.623.
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Regarding the rise in mortgage rates, some analysts also opine that the spike does not raise any major concern since they are roughly at par with the pre-pandemic levels. The rates had dropped below 3% for the first time in 50 years last July, fuelling the biggest boom in housing loans.
Concerns over a likely fall in the dollar rate have also bothered some investors, who estimate that the improvement in the economy post-COVID-19 may reduce its strength. Some, on the other hand, worry that the continued increase in dollar value may affect recoveries from the emerging markets.
