Yields Up, Tech Stocks Down

By Nicholas Jasinski |  Thursday, March 4 Fedspeak. Bond yields rose and technology shares fell as Federal Reserve Chairman Jerome Powell spoke on a variety of topics today. He said that the recent rise in yields had caught his attention, but that the central bank wouldn't be altering its current policy stance until he saw signs of sustained inflation. In other words, Powell isn't concerned about higher borrowing costs hindering the economic recovery—at least not yet. At least for now, the rising rates reflect expectations of faster economic growth, not tighter monetary policy. Powell underlined the Fed's intention to remain dovish for some time. "We're still a long way from our goals of maximum employment and inflation averaging 2% over time," Powell said in well-rehearsed remarks before the WSJ Jobs Summit. The yield on the 10-year U.S. Treasury note climbed 0.08 percentage point, to 1.55% today, its highest level since February 2020. The Fed might not be raising rates, but the bond market sure is. High-multiple, long-duration technology stocks took it on the chin today. The Nasdaq 100 index, which includes the largest 100 stocks in the Nasdaq Composite, fell into correction territory—down 10.2% from its Feb. 12 record high. The broader Nasdaq is 9.7% off its peak after a 2.1% decline today. The S&P 500 lost 1.3%, and the Dow Jones Industrial Average lost 1.1%. Energy was the sole winning sector in the S&P 500 today, adding 2.4%. The catalyst was a 4.2% surge in the price of a barrel of oil, which jumped after a surprising ending to a meeting of the Organization of the Petroleum Exporting Countries and allies like Russia. The group decided to extend most of its recent production cuts through April, despite the steady rise in the oil price and expectations of stronger demand as the global economy continues to recover.  "The cartel is biding its time, likely because oil production in the U.S. remains subdued—so producers elsewhere aren’t afraid they will lose market share by keeping barrels off the market,"  Barron's Avi Salzman wrote today. Oil prices are now at their highest levels in almost two years. All 10 of the top performers in the S&P 500 today were oil- and gas-related companies. The big event on tomorrow's calendar is the February jobs report.

 

DJIA: -1.11% to 30,924.14 S&P 500: -1.34% to 3,768.47 Nasdaq: -2.11% to 12,723.47 The Hot Stock: Diamondback Energy +9.2% The Biggest Loser: Tyler Technologies -13.6% Best Sector: Energy +2.4% Worst Sector: Technology -2.2%