Stocks fell on Friday to prolong a loss in technology stocks as investors turned away from growth stocks in anticipation of tighter monetary policy over the next year.
The S&P 500 gave way. The day before, the index closed significantly lower, with tech-heavy information technology and consumer discretionary leading the way down. And the Nasdaq had underperformed after a rally on Wednesday, declining 2.5% to give up all of its gains.
FedEx shares (FDX) jumped after the shipping giant raised its full-year earnings forecast, delivered better-than-expected financial results for the second quarter, and approved a new $ 5 billion share buyback program. Rivian (RIVN) posted a price decline after the first quarterly report since the IPO last month. The electric vehicle manufacturer it says in his letter to shareholders it expected to be “a few hundred vehicles short” of its previous goal of producing 1,200 units by the end of this year.
The main focus of investor attention this week continued to be the Federal Reserve’s updated monetary policy outlook for the next year, with central bank projections released mid-week indicating that the Fed will could hike rates three times in the next year.
The specter of higher interest rates – and a lower liquidity environment as the central bank is also accelerating the tapering process of its security purchases – has continued to weigh heavily on technology and growth stocks with longer duration, whose future earnings potential is valued. The Nasdaq Composite was down 5% in the past month through Thursday’s close. And the stocks of some notable technology stocks broke with Apple on Friday (AAPL) Stocks in early trading up more than 1% after falling nearly 4% on Thursday.
On the flip side, cyclical stocks in the energy and financial sectors outperformed Thursday, with prospects for higher interest rates and stronger growth benefiting those sectors.
“Investors need to understand that we are going through a major shift in monetary policy,” said Troy Gayeski, chief market strategist at FS Investments. Yahoo Finance said Live on Thursday. “The Fed has arguably been taking emergency measures for a lot longer than they should have been, and as money growth slows as it slows balance sheet expansion and eventually picks it up in the next year, you’d at least expect more volatility in the markets, which is really what we saw last month. ”
“The biggest difference between now and six months ago, or even more than a year ago, is that you could buy pretty much anything and be confident it would go up. The economy was booming, we had a lot of fiscal stimulus. “We still had unprecedented monetary stimulus,” he added. “And it’s a very different environment in 2022 where you’ll have to choose and choose much more carefully.”
9:30 am ET: stocks open lower to build on losses
The three major indices opened in the red and headed for a consecutive day of losses on Friday, hitting technology stocks for one more session. The Nasdaq lost nearly 1% shortly after the opening bell while the Dow fell about 200 points, or 0.5%. The S&P 500 lost another 0.7%.
The yield curve on government bonds flattened as long-end yields fell on Friday morning. The 10-year benchmark return fell nearly 3 basis points to below 1.4%.
7:20 a.m. ET Friday: Stock futures point to lower open, Nasdaq expands declines
Here the markets were traded on Friday morning before the opening bell:
S&P-500-Futures (ES = F): -12.25 points (-0.26%), to 4,656.50
Dow-Futures (YM=F): -12 points (-0.03%), up to 35,890
Nasdaq-Futures (NQ = F): -104.25 points (-0.66%) to 15,766.25
Spirit (CL=F): -1.33 USD (-1.84%) to 71.05 USD per barrel
Gold (GC=F): + $ 11.60 (+0.65%) to $ 1,809.80 per ounce
10-year treasury (^TNX): -1.5 bps to generate 1.407%
6:01 p.m. ET Thursday: Stock futures stable after tech sell-off
Here were the main moves in the markets as Thursday’s overnight session started:
S&P-500-Futures (ES = F): +5.25 points (+ 0.11%), to 4,674.00
Dow-Futures (YM=F): +52 points (+ 0.14%), to 35,954.00
Nasdaq-Futures (NQ = F): +6 points (+ 0.04%) to 15,876.50
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter