Stocks were mixed on Thursday as investors tried to recover a day after worries over tighter monetary policy led to the year’s first losing session.
The Dow Jones Industrial Average lost 83 points, or 0.2%. The S&P 500 fell rose 0.1% and the Nasdaq Composite added 0.2%. The Nasdaq has fallen about 4% over the previous two trading sessions.
Several tech stocks continued their slide as investors continued rotating out of high valuation tech stocks. Tesla and Netflix fell 4% and 3%, respectively. Apple and Amazon were lower too, however, other mega cap tech pushed higher. Alphabet added about 1%, Meta Platforms gained 3.6% and Microsoft nudged up slightly.
Fintech stocks and crypto stocks were hit hard. Robinhood dropped 6% and SoFi lost 5%, while Affirm and Afterpay both fell about 4%. In crypto, Coinbase fell 3%, Microstrategy slid 4% and Square lost 2%.
“Investors are trying to wrap their heads around what different leadership looks like: we’ve all been conditioned that tech is the winner all day every day and that is just not going to be the case this year,” said Liz Young, head of investment strategy at SoFi. “Finishing out 2021, there were still a lot of investors who were overweight tech. This is a chance to really make sure that your portfolio is set up to not be overly exposed to headwinds” seen by high multiple tech.
Rate-sensitive stocks were on the move a day after minutes from the Federal Reserve’s December meeting revealed the central bank is getting ready to remove its economic help more more quickly than anticipated. Officials discussed reducing the Fed’s balance sheet in another move to dial back its pandemic-era easy monetary policy.
As investors digested the minutes Thursday, the 10-year Treasury yield pushed above 1.75%, after ending last year at 1.51%.
Shares of Citi rose 2%, while Wells Fargo, Fifth Third Bancorp and Regions Financial gained about 1% each.
Energy shares helped boost the market as crude prices rose 3.4%. Diamondback Energy climbed about 4%, Devon Energy added 3% and Halliburton gained 2%.
The Fed’s plan to reduce the number of Treasurys and mortgage-backed securities it holds comes as it is already tapering its bond purchases and is set to hike interest rates after the taper concludes.
“Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate,” the minutes stated.
Stocks slid Wednesday following the release of the minutes. The blue-chip Dow Jones Industrial Average closed 392.54 points, or 1.07%, lower after hitting an intraday record earlier in the session. The S&P 500 fell 1.94%. The tech-heavy Nasdaq saw its biggest one-day loss since February, losing 3.34%.
“If you ride a wave of liquidity to the upside and that liquidity starts to go away, I don’t think it’s terribly surprising that you’re going to see a reaction,” said Kathy Jones, head of fixed income at Charles Schwab.
“This was the year we were going to transition from extremely easy monetary policy and fiscal policy to less easy monetary and less expansive fiscal policy. That has to have some impact on risk assets that have risen because the discount rate was so low,” Jones added.
Elsewhere Thursday, shares of Allbirds 3.9% after Morgan Stanley upgraded the shoe brand, whose stock has struggled since it went public in November.
Shares of Walgreens Boots Alliance reversed earlier gains from a strong earnings report and last traded down about 1%. Meanwhile, Bed Bath & Beyond shares soared more than 12% even after the company reported a loss for its fiscal third quarter.
Initial claims for unemployment insurance ticked up to 207,000 for the week ending Jan.1, the Labor Department reported Thursday. Economists surveyed by Dow Jones expect claims would total 195,000.
The data comes a day ahead of the Labor Department’s key nonfarm payrolls report, which is expected to show that the economy added 422,000 jobs in December. However, payroll processing firm ADP reported Wednesday that companies added a much higher-than-expected 807,000 positions for the month, indicating a possible upside surprise to Friday’s count from the department’s Bureau of Labor Statistics.
–CNBC’s Jeff Cox contributed to this report.
Stocks were little changed Thursday after the major U.S. stock averages fell sharply in the first losing regular trading session of the year.