Stocks fell sharply on Thursday, completely erasing a rally from the previous session in a stunning reversal that offered investors one of the worst days since 2020.
The Dow Jones Industrial Average lost 1,063 points, or 3.12%, to close at 32,997.97. The heavy Nasdaq Composite fell 4.99% to close at 12317.69, its lowest closing level since November 2020. Both losses were the worst one-day drops since 2020.
The S&P 500 fell 3.56% to 4,146.87, marking its second worst day of the year.
The moves come after a big rally in stocks on Wednesday, when the Dow climbed 932 points, or 2.81%, and the S&P 500 rose 2.99% for its biggest gain since 2020. The Nasdaq Composite jumped 3.19%.
All those gains were erased by Thursday afternoon in New York.
“If it goes up 3% and then gives up half a per cent the next day, that’s pretty normal stuff. … EXCEPTIONAL,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.
Big tech stocks came under pressure, with Facebook and Amazon’s Meta Platforms dropping 6.8% and 7.6%, respectively. Microsoft fell about 4.4%. Salesforce fell 7.1%. Apple sank nearly 5.6%.
E-commerce stocks were a major source of weakness on Thursday after some disappointing quarterly reports.
Etsy and eBay fell 16.8% and 11.7%, respectively, after issuing weaker-than-expected revenue guidance. Shopify is down about 15% after losing estimates on the top and bottom lines.
The dips pushed the Nasdaq into its worst day in nearly two years.
The Treasury market also saw a dramatic reversal of Wednesday’s rally. The 10-year Treasury yield, which moves opposite the price, jumped back above 3% On Thursday, it hit its highest level since 2018. Rising prices could put pressure on growth-oriented technology stocks, as they make off-the-shelf earnings less attractive to investors.
On Wednesday, the Fed raised its benchmark interest rate by 50 basis points, as expected, and said it would start cutting its balance sheet in June. However, Fed Chairman Jerome Powell said during his press conference that the central bank was “not seriously considering” a 75 basis point rate hike, which appeared to spark a rush.
However, the Fed remains open to the possibility of raising interest rates above neutrality to curb inflation, noted Zachary Hill, head of portfolio strategy at Horizon Investments.
“Despite the tightening we’ve seen in financial conditions over the past few months, it is clear that the Fed would like to see them tightened,” he said. “Rising stock valuations do not align with this desire, so unless supply chains heal quickly or workers stream back into the workforce, any stock surges will likely be in the offing as the Fed’s messaging gets tougher again.”
Stocks that were boosted by economic growth also took a hit Thursday. Caterpillar stock is down about 3 percent, and JPMorgan Chase is down 2.5 percent. Home Depot sank more than 5%.
David Rubinstein, co-founder of The Carlyle Group, said investors need to “get back to reality” about market and economic headwinds, including the war in Ukraine and rising inflation.
“We’re also looking at 50 basis point increases at the next FOMC meetings. So we’re going to tighten a bit. I don’t think that’s going to tighten that much until the economy slows…but we still have to admit that we have some real economic challenges in the pipeline. United State “.croak box. “
Thursday’s heavy sell-off was broad, with more than 90% of S&P 500 shares down. Even this year’s top runners-up lost ground, with Chevron, Coca-Cola and Duke Energy all down less than 1%.
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