Stocks rocked by rate-hike fears
Growth stocks outperformed
Will bull market continue under rate hike anticipation?
Verdence Capital Advisors director Megan Horneman weighs in on international market strength.
U.S. equity markets were pressured Friday as the Federal Reserve signaled rate hikes could come as early as next year.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 39593.66 | -1,014.79 | -2.50% |
| SP500 | S&P 500 | 5268.05 | -188.85 | -3.46% |
| I:COMP | NASDAQ COMPOSITE INDEX | 16387.311061 | -737.66 | -4.31% |
The Dow Jones Industrial Average fell 532 points, or 1.57%, declining for a fifth straight day, while the S&P 500 and the Nasdaq Composite lost 1.31% and 0.92%, respectively.
The selling came after St. Louis Fed President James Bullard told CNBC that a rate hike could come next year – ahead of the Fed's 2023 target disclosed Wednesday. The yield on the 10-year note slipped below 1.45% and closed at its lowest level since March 2.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| TSLA | TESLA INC. | 252.40 | -19.80 | -7.27% |
| SQ | NO DATA AVAILABLE | - | - | - |
Growth stocks including Tesla Inc. and Square Inc., which typically benefit from lower interest rates, outperformed.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BAC | BANK OF AMERICA CORP. | 35.81 | -1.38 | -3.71% |
| JPM | JPMORGAN CHASE & CO. | 227.12 | -7.29 | -3.11% |
At the same time, bank stocks like Bank of America Corp. and JPMorgan Chase & Co were weaker as lower interest rates reduce their net interest margins.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| NVDA | NVIDIA CORP. | 107.57 | -6.76 | -5.91% |
| MU | MICRON TECHNOLOGY INC. | 70.05 | -7.82 | -10.04% |
| INTC | INTEL CORP. | 19.88 | -1.65 | -7.66% |
Elsewhere, chipmakers including Nvidia Corp., Micron Technology Inc. and Intel Corp. were mixed after a bipartisan group of U.S. senators proposed a 25% tax credit for investments in semiconductor manufacturing. U.S. chip production has fallen sharply in recent years to 12% of global output, down from 37% in 1990.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CAI | NO DATA AVAILABLE | - | - | - |
In deals, container leasing and management company CAI International Inc. has agreed to be taken over by Japan’s Mitsubishi HC Capital Inc. for $1.1 billion, or $56 per share. The price represents a 47% premium to where shares closed on Thursday.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| EBAY | EBAY INC. | 62.47 | +0.51 | +0.82% |
Online marketplace eBay Inc. and Norway’s Adevinta were granted regulatory approval for the approximately $13 billion deal for the former’s classified ads business. EBay will receive $2.5 billion in cash and 540 million Adevinta shares.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ADBE | ADOBE INC. | 350.05 | -14.59 | -4.00% |
In earnings, Adobe Inc. beat on both the top and bottom line as quarterly profit rose 23% year over year. The software maker forecast earnings for the current quarter that were ahead of expectations.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SWBI | SMITH & WESSON BRANDS | 8.73 | -0.19 | -2.13% |
Gun-maker Smith & Wesson Brands Inc. reported sales soared 67% from a year ago to a record of almost $323 million. The company raised its quarterly dividend by 60% to 8 cents per share and announced a new $50 million share buyback program.
In commodities, West Texas Intermediate crude oil added 60 cents to $71.64 a barrel. Gold, meanwhile, slid $5.90 to $1,767.90 an ounce. The precious metal plunged $109.50 this week.
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Overseas markets were under pressure.
Britain’s FTSE 100 paced the decline in Europe, trading down 1.9%, while Germany’s DAX 30 and France’s CAC 40 fell 1.78% and 1.46%, respectively.
In Asia, Japan’s Nikkei 225 lost 0.19% and China’s Shanghai Composite slipped 0.01%. Hong Kong’s Hang Seng index outperformed, climbing 0.85%.