Stocks moved sharply lower Thursday as the recent theme of the market—rising bond yields and falling prices of technology companies—continued to weigh on trading. The Dow fell 559 points, or 1.7%, to 31,402; the S&P 500 fell 96 points, or 2.4%, to 3,829; and the Nasdaq fell 478 points, or 3.5%, to 13,119. Once again it was the bond market that was driving the stock market's direction and investors' moods. The yield on the 10-year US Treasury note rose to 1.52%, a level not seen in more than a year and far above the 0.92% level it was trading at only two months ago. That indicated investors were moving money out of bonds, a sign of worries over higher inflation as well as confidence in economic growth. Every tick up in bond yields recently has corresponded with a tick down in stock prices, per the AP.
“The yield on the 10-year note crossed the line in the sand at 1.50%, which from a technical perspective further confirms that higher rates are likely,” said Sam Stovall of CFRA. The economy grew at an annual pace of 4.1% in the final three months of 2020, slightly faster than first estimated. The influx of new stimulus efforts and accelerated vaccine distribution could lift growth in the current quarter to 5% or even higher. “The bond market is reacting to the positive economic growth,” said Brent Schutte of Northwestern Mutual Wealth Management Company. “It means there’s some hope on the horizon.” Shares of several companies embraced by online retail investors earlier this year were sharply higher, including GameStop, which surged by nearly 50% on top of more than doubling a day earlier.
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