Stock market today: The Dow Jones falls as tech stocks are hit by higher bond yields
Shares fell on Friday afternoon as gains made earlier in the day on hopes for diplomatic progress between Russia and Ukraine turned into losses. Tech stocks were particularly hard hit by rising bond yields.
Dow Jones Industrial Average
fell 230 points, or 0.7%. During this time, the
fell 1.3% and 2.2%, respectively. All three indices started the day with gains before selling off.
Friday’s performance was part of a bigger change. For the week, the Dow Jones, S&P 500 and Nasdaq fell 2%, 2.9% and 3.5% respectively.
Investors took profits on Friday when they could before the weekend, said Tom Essaye, founder of Sevens Report Research. Saturday and Sunday could easily bring unfortunate news on the war front – and traders would rather be able to sell any recent gains at Friday’s prior prices than wait for a potentially lower price at Monday’s open.
Markets continued to struggle with the economic and corporate earnings implications of the Russian-Ukrainian conflict. “We have a ton of uncertainty right now,” said Stephanie Link, chief investment strategist and portfolio manager at Hightower Advisors. “We are dealing with a war, we are dealing with inflation. We don’t know what that means for revenue.
The past two days have illustrated this uncertainty. On Thursday, news emerged that talks in Turkey between Russia and Ukraine had yielded no positive results. But on Friday, Reuters reported that Russian President Vladimir Putin said there had been “positive changes” in the talks between the two sides.
There was another possible development: Reuters also reported that Ukraine had said that Belarus could soon join the invasion of Ukraine. However, AFP, quoting a Pentagon official, said the United States had yet to see evidence that Belarusian troops were in Ukraine.
Overall, the extreme levels of fear in the market seem to have turned into something more like worry. For example, the
Cboe Volatility Index
fell from its peak of 36 in 2022, which it reached on Monday, to around 30 on Friday, a sign of easing tensions. Meanwhile, as the price of WTI crude oil slid from Sunday’s multi-year high of $130 a barrel to $109 a pop. Markets were expecting heavy restrictions on Russian oil, some of which have already been imposed by the United States, which would reduce global supply and lead to even higher inflation.
And while money initially moved into equities in the morning, capital left safe-haven assets. The price of the 10-year Treasury fell on Friday, pushing its yield up 2% from a March closing low of 1.73%.
This hurt technology stocks. Over the past few weeks, the 10-year yield has traded between 1.72% and 2%, as traders have turned to the bond for protection when the headlines on Russia were ugly – and in came out when the headlines got better. Now the yield is nearing its pandemic-era peak. If the yield exceeds this level, it could indicate that it is on a sustainably higher trajectory. Higher long-term bond yields make future earnings less valuable, and many tech companies are valued based on expected earnings for many years to come.
For tech stocks, “the bottom line is returns,” Essaye said.
The picture was mixed abroad. that of Hong Kong
Hang Seng Index
fell 1.6%, under pressure from US regulatory scrutiny of Chinese companies listed in New York. Equities were more dynamic in Europe, where the
These five stocks were in motion on Friday:
(ticker: DIDI) saw its US-listed shares fall 44.1% after a Bloomberg report said the company suspended preparations for its planned Hong Kong listing.
(ORCL) closed 1.5% higher after the software company released financial results in line with the company’s own guidance on Thursday evening and provided a profit forecast for the April quarter ahead of estimates of Wall Street. German Peer Actions
(SAP) fell 0.8%, with analysts noting that
the results indicated a positive read across for the entire sector.
(RIVN) fell 7.6% after the electric vehicle maker reported a loss of $4.83 per share, better than estimates of $2, on sales of $54 million, below expectations. $64 million. The company also said it will manufacture 25,000 vehicles this year, below expectations of 50,000.
(DOCU) fell 20.1% after the company reported earnings per share in line with analysts’ estimates and sales that topped. But the company said it expects annual sales of $2.48 billion, below expectations of $2.61 billion.