Stocks Close Mixed as Dow Drops, Tech Claws Back Some Losses

Stocks end mixed Friday, with the Dow declining and tech finishing in the green. The moves follow Thursday's selloff, which sank equities and Treasury bonds.
Author:
Publish date:

Stocks finished mixed Friday following a sharp selloff that sank both equities and Treasuries.

The Dow Jones Industrial Average finished down 469 points, or 1.5%, to 30,932, the S&P slipped 0.48% and the tech-heavy Nasdaq gained 0.56%.

Particularly weighing on the Dow: Salesforce  (CRM) - Get Report, down 6.4%. In the tech sector, Apple  (AAPL) - Get Report edged 0.2% higher while Microsoft  (MSFT) - Get Report gained 1.5%.

For the week, the Dow fell 1.8%, the S&P 500 skidded 2.5% and the Nasdaq declined 4.9%.

Stocks suffered their worst day in weeks on Thursday as Treasury yields rose to above 1.5%, the highest levels in a year. The tech sector fared the worst, with the Nasdaq falling 3.52% Thursday, as high-growth stocks are considered more vulnerable to inflation pressures. 

"The tech-stock sector is the most vulnerable from rising bond yields and will face the brunt of the decline," said James McDonald, chief executive and chief investment officer at Hercules Investments. 

"Unlike other stock sectors like cyclicals, stocks in the tech sector are valued on longer-term earnings. If bond yields and borrowing costs are rising, a company's longer-term earnings may be negatively affected."

The 10-year Treasury yield fell below 1.5% on Friday, trading at 1.45%.

"It is all about bond yields. ... There was a flash spike in the 10-year yield (Thursday) and that upset the apple cart, as higher yields are spooking the stock market," said Ryan Detrick, chief market strategist for LPL Financial. 

"Could there be more inflation coming than what most think? Although the (Federal Reserve) isn't worried about that, the market might be."

Investors increasingly have become worried that rising inflation could prompt the Federal Reserve to raise interest rates.

Fed Chairman Jerome Powell said, however, inflation might take more than three years to hit the Fed’s target of 2%, meaning rates won't be lifted anytime before 2023. He also said rising yields are a sign of the market's optimism about an economic recovery.

U.S. personal incomes surged 10% in January as another round of pandemic-relief checks were sent to Americans, while spending rose last month by a more-than-expected 2.4%.

Salesforce tumbled after the cloud-based business-software provider's fiscal-fourth-quarter sales growth disappointed investors. Several analysts also cut their price targets on the stock.