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Bonds and Tech Fall After Job and Earnings Data

Social Security COLA
Social Security COLA; Source- CNBC

As investors processed a wave of dismal tech reports and new indications of labor-market resilience that might support another increase in interest rates this year, US stocks and Treasuries declined on Thursday.

The tech-heavy Nasdaq 100 index dropped 2.3%, with Netflix Inc. posting its largest annual decrease on a weak revenue outlook. Following a decline in profits in the second quarter, Tesla Inc. fell. Additionally, the yield on 10-year Treasuries increased by 10 basis points as traders increased their odds of a quarter-point rate rise after the Federal Reserve’s meeting next week due to an unexpected decline in weekly initial jobless claims.

Result Of Losses

The sharp market rebound this year, which has seen the S&P 500 increase 18% and the Nasdaq 100 gain 41% despite an uncertain economic outlook and the Fed’s aggressive tightening campaign, is being put on hold as a result of the losses.

Lewis Grant, senior portfolio manager at Federated Hermes, stated in a letter that “in the last 24 hours alone there has been talk of a worsening of the conflict in Ukraine, a further slowdown in China, and major US banks facing significant real estate losses.” Each of these dangers has the capacity to stop the rebound in its tracks, coupled with an infinite number of unknowns.

Following an uptick in hostilities in the Black Sea between Russia and Ukraine on Wednesday, wheat prices had risen sharply. Early on Thursday, China increased its support for the yuan in response to an increase in rhetoric aimed at boosting corporate confidence.

Given this context, returns from a small number of IT stocks are “overdone” and may signal the beginning of a slump, according to Cameron McCrimmon, strategist at Aegon Asset Management.

“The breadth of returns on the S&P 500 has become increasingly narrow, driven by a few mega-cap tech stocks on AI optimism, which is a classic sign of an ageing bull,” noted McCrimmon in a note.

Partner At Crewe Advisors Louise Goudy Willmering Shared The Idea


Source: ABC news

Goudy Willmering noted over the phone that it was not a good idea to have a few big names in technology drive everything. “As we look toward the third and fourth quarters, earnings will unquestionably determine where we go from here.”

After Taiwan Semiconductor Manufacturing Co. lowered its projection despite the rise in AI development, tech companies in Europe, particularly ASML Holding NV, fell. In the meantime, stocks plummeted across Asia, including mainland China, Hong Kong, and Japan.

In other markets, the dollar recovered losses to trade more favorably than significant rivals. Oil prices fluctuated as gold prices fell.

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