U.S. stock markets closed sharply lower on Thursday as rising bond yields raised concerns among market participants on risky assets like equities. Moreover, several weaker-than-expected earnings results also dented investors’ confidence. All the three major stock indexes ended the day in red.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1.8% or 559.85 points, closing at 31,402.01, snapping its four-day winning streak. Notably, 27 components of the 30-stock index ended in red while 3 finished the day in green.
The tech-heavy Nasdaq Composite closed the day at 13,119.43, down 3.5% or 478.54 points, reversing its gains from Wednesday, on the back of weak performance by large-cap technology stocks. The S&P 500 dipped 2.5%, closing the day at 3,829.34, giving up its two-day winning streak. The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) declined 3.7% and 3.5%, respectively. Notably, all eleven sectors of the benchmark index closed in the red.
The fear-gauge CBOE Volatility Index (VIX) was up 35.4% to 28.89. A total of 15.84 billion shares were traded on Thursday, higher than the last 20-session average of 15.61 billion. Decliners outnumbered advancers on the NYSE by a 6.71-to-1 ratio. On Nasdaq, a 7.36-to-1 ratio favored declining issues.
Rising Bond Yields Lead Wall Street Lower
Wall Street closed sharply lower on Thursday after the surging 10-year Treasury yield led to a selloff in equities. Notably, the Treasury yield closed at around 1.5%, its highest level since February 2020, after rising to as high as 1.6%. Moreover, the rise also put the benchmark rate above the S&P 500’s dividend yield which resulted in equities losing their premium over bonds.
Earnings Results Disappoint
Teladoc Health, Inc. TDOC incurred fourth-quarter 2020 loss of $0.27 per share, wider than the Zacks Consensus Estimate of a loss of $0.25. (Read More)
Papa John's International, Inc. PZZA came out with quarterly earnings of $0.40 per share, missing the Zacks Consensus Estimate of $0.43 per share. This compares to earnings of $0.37 per share a year ago. (Read More)
Sangamo Therapeutics, Inc. SGMO came out with a quarterly loss of $0.29 per share wider than the Zacks Consensus Estimate of a loss of $0.18. (Read More)
Consequently, shares of Teladoc, Papa John’s and Sangamo lost 13.7%, 11.6% and 10.6%, respectively. Notably, all three companies carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The U.S. Department of Labor reported that initial jobless claims declined by 111,000 to 730,000 for the week-ended Feb 20. The consensus estimate was 830,000 and previous week’s data was revised downward by 20,000 to 841,000 from 861,000 reported earlier.
Continuing claims (people who are already receiving benefits) declined by 101,000 to 4,419,000 for the week ended Feb 13 from the prior week which was revised upward by 26,000 to 4,520,000 from 4,494,000 reported earlier. The four-week moving average for continuing claims dropped by 91,500 to 4,547,000 from the prior week’s average which was revised upward by 6,500 to 4,638,500 from 4,632,000 reported earlier.
Per the second estimate released by the U.S. Department of Commerce, the fourth-quarter 2020 GDP increased at an annual rate of 4.1%, falling short of the consensus estimate of 4.2%, but higher than the advance estimate of 4% reported earlier.
The U.S. Census Bureau reported that new orders for manufactured durable goods increased 3.4% in January, marking the ninth successive month of gains, compared to 1.2% growth in December (revised), surpassing the consensus estimate of 1.2% increase.
The National Association of Realtors reported that pending home sales fell 2.8% in January, wider than the consensus estimate of 0.5% fall and compared to an increase of 0.5% in December (revised).
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