(Bloomberg) — The rout in U.S. technology stocks continued Wednesday as rising Treasury yields fueled greater concern about growth and profitability.
The yield on the U.S. 10-year note climbed to 1.68% after a second Federal Reserve purchase operation and a private jobs report indicated a strengthening labor force, giving traders conviction the Fed will raise rates three times this year.
The S&P 500 fell while the Dow Jones Industrial Average was on pace for a record. The selloff in tech extended to Asia but mostly spared Europe. The Stoxx Europe 600 drifted to a record. Meanwhile, a gauge of Chinese names listed in Hong Kong fell to a six-year low. Tencent Holdings Ltd., for instance, slid after paring its tech investments amid Beijing’s regulatory crackdown.
Markets have broadly turned their attention to tightening monetary policy while concerns persist about the omicron variant’s threat to global growth. Hong Kong reimposed social curbs and halted flights from eight countries. Meanwhile, U.S. school closings are accelerating as case counts soar.
“We do expect more waves in 2022, probably more economic halts and probably more shock to the market,” said Anderson Lafontant, senior advisor of advanced planning at Miracle Mile Advisors. “But in general, we think that it should be a positive year and not as positive as 2021. So a little more muted.”
Data from the ADP Research Institute showed Wednesday U.S. companies in December added the most jobs in seven months, suggesting employers were able to fill a near-record number of open positions. The report precedes Friday’s monthly jobs report from the Labor Department, which is currently forecast to show that the U.S. added 384,000 private payrolls in December.
“Just because we have a new year doesn’t mean conditions for the market change, and obviously the market finished a great year on a strong note in December and it’s continued right into January,” David Donabedian, chief investment officer of CIBC Private Wealth Management, said by phone. “It’s the old law of physics that an object in motion tends to stay in motion until it meets an obstacle.”
The dollar was weaker against major peers, oil in New York climbed, and Bitcoin traded near $46,100.
What to watch this week:
- FOMC meeting minutes scheduled for release Wednesday
- Fed’s Bullard discusses the U.S. economy and monetary policy in an event on Thursday
- Fed’s Daly discusses monetary policy on a panel Friday
- ECB’s Schnabel speaks on a panel Saturday
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 fell 0.3% as of 12:50 p.m. New York time
- The Nasdaq 100 fell 1.3%
- The Dow Jones Industrial Average rose 0.2%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.5% to $1.1345
- The British pound rose 0.4% to $1.3586
- The Japanese yen rose 0.2% to 115.97 per dollar
Bonds
- The yield on 10-year Treasuries advanced three basis points to 1.68%
- Germany’s 10-year yield advanced four basis points to -0.08%
- Britain’s 10-year yield was little changed at 1.09%
Commodities
- West Texas Intermediate crude rose 1.7% to $78.28 a barrel
- Gold futures rose 0.5% to $1,823.70 an ounce
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