Stocks sink as Fed's Powell warns of patience if inflation returns

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Economist says US could see 10% growth in 2021

Renaissance Macro Research Economics head Neil Dutta explains the data behind his optimistic expectations for the U.S. economy.

U.S. equity markets slid back into negative territory Thursday afternoon in a sharp selloff following a speech from Federal Reserve Chairman Jerome Powell that said the central bank would be patient in taking action should inflation return.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 30940.15 -329.94 -1.06%
SP500 S&P 500 3777.11 -42.61 -1.12%
I:COMP NASDAQ COMPOSITE INDEX 12781.374443 -216.38 -1.66%
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The Dow Jones Industrial Average fell over 400 points, or 1.2%, while the S&P 500 and the Nasdaq Composite weaker by 1.4% and 2%, respectively. The selling has pushed the tech-heavy Nasdaq into negative territory for the year.

FED CHAIR POWELL TALKS INFLATION, RATE HIKES: HIGHLIGHTS

Equity markets, especially the Nasdaq, have seen heightened volatility in recent weeks as inflation fears have run the 10-year yield above 1.5%, the level of the S&P 500’s dividend yield. The benchmark yield was up 6 basis points at 1.54% on Thursday. Last week, the yield touched a one-year high of 1.61%.

Ticker Security Last Change Change %
USO UNITED STATES OIL FUND L.P. 42.98 +1.84 +4.47%
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Oil spiked with West Texas Intermediate crude oil spiking $3.02 to $64.30 per barrel as OPEC leaders and their allies reviewed supply cuts.

Looking at stocks, mega-cap technology companies, including Apple Inc., Microsoft Corp. and Amazon Inc., which as growth stocks are particularly sensitive to higher bond yields, remained in focus.

Ticker Security Last Change Change %
AAPL APPLE, INC. 120.68 -1.38 -1.13%
MSFT MICROSOFT CORP. 227.51 -0.05 -0.02%
AMZN AMAZON.COM, INC. 3,006.98 +1.98 +0.07%
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Elsewhere, Snap Inc. CEO Evan Spiegel said his company’s forecast to deliver 50% annual revenue growth for several years takes is without adding users or engagement growth. The company expects to grow average revenue per user through developing augmented reality products and adding media content.

Ticker Security Last Change Change %
SNAP SNAP, INC. 58.02 -2.00 -3.32%
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PORTNOY BACKS VAN ECK SOCIAL MEDIA ETF 'BUZZ'

In mergers and acquisitions, identity and access management company Okta Inc. agreed to acquire rival Auth0 in a $6.5 billion all-stock deal. Auth0 last raised money in July – at a $1.92 billion valuation.

Ticker Security Last Change Change %
OKTA OKTA, INC. 229.94 -11.28 -4.68%
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Meanwhile, Jack Dorsey's Square is taking a majority $297 million stake in Jay-Z's streaming service, Tidal, and the rapper will join the board.

Ticker Security Last Change Change %
SQ SQUARE INC COM 219.56 -14.33 -6.13%
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In earnings, chipmaker Marvell Technology Group Ltd. posted quarterly revenue that exceeded Wall Street estimates, but warned supplies could be tight into 2022.

Ticker Security Last Change Change %
MRVL MARVELL TECHNOLOGY GROUP LTD. 41.04 -4.52 -9.92%
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BJ Wholesale Club Holdings Inc. reported quarterly profit surged 129% from a year ago, but declined to provide a financial outlook due to uncertainty from the pandemic and government stimulus checks. Costco will report results after the close of trading.

Ticker Security Last Change Change %
BJ BJS WHSL CLUB HLDGS INC 38.04 -0.66 -1.69%
COST COSTCO WHOLESALE CORP. 317.92 -6.00 -1.85%
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In other commodities, gold, meanwhile, slipped $10.30 to $1,705.50 an ounce.

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Overseas markets traded mostly lower.

Britain’s FTSE 100 paced the decline in Europe, down 0.37% while Germany’s DAX 30 slipped 0.17%. France’s CAC 40 edged up 0.01%.

In Asia, Hong Kong’s Hang Seng index lost 2.15%, Japan’s Nikkei 225 fell 2.13% and China’s Shanghai Composite fell 2.05%.

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