🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

S&P 500 Slips on Rout in Growth Stocks After Bond Yields Surge on Fed Hike Bets

Published 06/14/2022, 02:08 AM
© Reuters
US500
-
DJI
-
AMZN
-
COP
-
BKNG
-
PXD
-
TSLA
-
IXIC
-
MSTR
-
US10YT=X
-
META
-
CZR
-
PSX
-
NCLH
-
AAL
-
SQ
-
COIN
-

By Yasin Ebrahim

Investing.com -- The S&P 500 fell into bear-market territory on Monday, following a sea of red in growth stocks as Treasury yields surged on bets that the Federal Reserve is set to lean more hawkish to tackle inflation.

The S&P 500 fell 2.7%, taking its total losses above 20% since its recent peak and into bear-market territory. The Dow Jones Industrial Average fell 2.1%, or 645 points, the Nasdaq was down 3.4%.

The 10-year Treasury yield climbed to its highest level since 2011 on concerns the Fed will be forced to step on the monetary policy tightening accelerator following the upside surprise in Friday’s inflation data.

Growth sectors of the market including consumer discretionary and tech were the biggest drag on the broader market.

Tesla (NASDAQ:TSLA) fell more than 6% to lead the decline in consumer discretionary amid worries about the impact of the potential lockdown measures in Beijing following a spike in Covid-19 cases.

Big tech was led lower by Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META), each down more than 4%, as bets on rising rates dent investor appetite for stocks with higher valuations.

The U.S. central bank is expected to raise its benchmark rate by 0.5% this week, but could signal a willingness to do more following recent data showing price pressures continue to run hot.

“The FOMC is likely to respond to the firmer inflation print and the rise in long-term inflation expectations with a resolutely hawkish message at the June meeting, in addition to the 50bp rate hike it is set to deliver,” Goldman Sachs said in a note.

Against the backdrop for a more aggressive Fed, expectations are growing that the central bank could slow the economy into recession leading to a weaker consumer. That would hurt demand for travel and leisure.

Caesars Entertainment (NASDAQ:CZR), American Airlines (NASDAQ:AAL), Norwegian Cruise Line (NYSE:NCLH) and Booking Holdings (NASDAQ:BKNG) were down sharply.

Energy, meanwhile, struggled to cut losses even as oil prices turned positive despite concerns that rising Covid-19 cases in China could slow energy demand

Pioneer Natural Resources (NYSE:PXD), Phillips 66 (NYSE:PSX), and ConocoPhillips (NYSE:COP) were among the biggest decliners in the sector.

Cryptocurrency-related stocks were deeply in the red following a rout in cryptocurrencies triggered by crypto lending company Celsius Network freezing withdrawals and transfers.

MicroStrategy (NASDAQ:MSTR), Block (NYSE:SQ) and Coinbase Global (NASDAQ:COIN) were down double digits.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.