Stocks ended a volatile session sharply lower on Wednesday, as investors nervously eyed soaring bond yields and mixed earnings results from some major index components.
The Nasdaq Composite dropped another 1.2% and entered a correction, logging a closing level more than 10% below its recent record high from November.
Meanwhile, Bank of America (BAC) shares gained after the company topped estimates for quarterly loan growth and posted a jump in profits in its key consumer banking business. Procter & Gamble (PG) also rose after the company exceeded expectations in its latest results and raised its sales guidance for the full year, with higher prices from the company helping boost results.
Treasury yields gave back some recent gains, and the benchmark 10-year yield retreated after nearing 1.9% a day earlier for its highest level since January 2020. Commodity prices advanced further, and U.S. West Texas intermediate crude oil futures rose above $86 per barrel in its highest level since 2014.
According to many strategists, the recent volatility across risk assets has largely reflected investors' ongoing reassessment of highly valued asset prices, with interest rate hikes and an attenuation of liquidity out of the Federal Reserve looming.
Though Fed officials are in a blackout period before their next meeting next week, policymakers over the past several weeks have telegraphed that they are gearing up to raise interest rates and eventually draw down the nearly $9 trillion on the Fed's balance sheet as the economic recovery continues and inflation soars.
"At this point, it's very clear that the first rate hike will be at the March meeting," Jason Ware, Albion Financial Group partner and chief investment officer, told Yahoo Finance Live on Tuesday. "What we're going to be looking at is the language around inflation because at the end of the day, inflation is what's driving Fed policy."
Other strategists offered a similar take.
"I think it's definitely a repositioning of the market to deal with really what the Fed has done. And the Fed has basically created some certainty around the fact that there will be rate rises," David Bailing, Citi Global Wealth chief investment officer and head of global wealth investments, told Yahoo Finance Live on Tuesday. "Then the question is, how much do they actually release from their portfolio? And it's that that creates the enormous uncertainty."
"What we're seeing now is a broad-based reevaluation of the highest growth shares, which obviously are the most sensitive to interest rates. But what's happened is it's taking place across the board," he added. "This is going to present a buying opportunity in areas like fin tech, in areas like cybersecurity, where you have very steady growth, you have increased cash flows and potentially profitability, as opposed to the more speculative shares."
4:04 p.m. ET: Nasdaq sinks by 1.2%, entering correction as tech rout extends
Here were the main moves in markets as of 4:04 p.m. ET:
S&P 500 (^GSPC): -44.35 (-0.97%) to 4,532.76
Dow (^DJI): -339.82 (-0.96%) to 35,028.65
Nasdaq (^IXIC): -166.64 (-1.15%) to 14,340.25
Crude (CL=F): +$1.00 (+1.17%) to $86.43 a barrel
Gold (GC=F): +$31.00 (+1.71%) to $1,843.40 per ounce
10-year Treasury (^TNX): -3.8 bps to yield 1.8270%
12:35 p.m. ET: Luckin Coffee reportedly aims to relist in the U.S.
The Chinese coffee chain Luckin Coffee is seeking to list publicly in the United States after being removed from the Nasdaq in 2020 following an accounting scandal, according to a report from the Financial Times.
The U.S. SEC charged Luckin in 2020 with "defrauding investors by materially misstating the company’s revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth and increased profitability and to meet the company’s earnings estimates," according to a statement at the time. Luckin paid the SEC $180 million to settle charges over $300 million in fabricated sales.
11:54 a.m. ET: Gold prices rise by most in a month as commodity prices gain
Prices of gold (GC=F) rose more than 1.6% Wednesday to top $1,840 per ounce, with broad strength across commodities lifting prices of the precious metal.
Shares of gold mining companies also tracked the increase in spot prices and futures. Newmont Corporation shares (NEM) gained more than 4% intraday, while Royal Gold (RGLD) and Barrick Gold Corp. (GOLD) rose more than 3.5% and 7%, respectively.
10:53 a.m. ET Kohl's shares jump to highest since November as activist pressure mounts
Kohl's (KSS) shares extended advances on Wednesday, building on Tuesday's gains as activist pressure mounted for the beleaguered retailer. The stock rose more than 6% intraday.
Earlier this week, Macellum Advisors sent a letter to Kohl’s saying the company should consider options including a potential sale if it fails to boost business enough to increase its stock price. Macellum has an about 5% stake in Kohl’s, and in its letter, urged the company to make changes including to its board. In April 2021, Kohl’s had agreed to add two of Macellum’s nominees to a board of independent directors – but the stock has slid since then.
“I know the board needs more help. I know they need a shareholder in the room that has a sense of urgency, that has a real understanding of retail and the dynamic and the competitive landscape," Macellum CEO Jonathan Duskin told Yahoo Finance Live on Tuesday. "And I think we can really be incredibly beneficial to [Kohl’s CEO Michelle Gass] and help her improve the business and turn this company around and create meaningful value for shareholders.”
Kohl’s responded to Macellum’s letter in a statement late Tuesday.
"We have continued to engage with Macellum since the settlement and are disappointed with the path they have taken and the unfounded speculation in their announcement and letter," the company said in a press release. "Our strategic plan to transform Kohl's into the leading omnichannel destination for the active and casual lifestyle continues to gain traction."
9:30 a.m. ET: Stocks open higher
Here's where markets opened Wednesday morning:
S&P 500 (^GSPC): +22.32 points (+0.49%) to 4,599.43
Dow (^DJI): +92.17 points (+0.26%) to 35,460.64
Nasdaq (^IXIC): +77.45 points (+0.53%) to 14,596.81
Crude (CL=F): +$0.76 (+0.89%) to $86.19 a barrel
Gold (GC=F): +$12.10 (+0.67%) to $1,824.50 per ounce
10-year Treasury (^TNX): -1.2 bps to yield 1.856%
9:23 a.m. ET: Housing starts unexpectedly rose in December
Housing starts posted a surprise increase at the end of 2021, with ongoing demand for homes and apartments helping boost housing activity even as rates rose.
Housing starts rose at a seasonally adjusted annualized rate of 1.702 million in December, climbing by 1.4% compared to November's revised rate, according to Commerce Department data Wednesday. In November, new homebuilding increased at an 8.1% rate, which was downwardly revised from the 11.8% increase previously reported. Starts for multi-family homes, which comprise apartment buildings and condos, were up 10.7% to reach an annualized rate of 530,000, or the fastest since February 2020.
Building permits, which serve as a leading indicator of future homebuilding, increased by 9.1% in December, blowing past estimates. Consensus economists were looking for permits to fall by 0.8% during the month, according to Bloomberg data.
7:37 a.m. ET: Stock futures point to a higher open
Here's where markets were trading Wednesday morning:
S&P 500 futures (ES=F): +9.75 points (+0.21%), to 4,581.00
Dow futures (YM=F): +45 points (+0.13%), to 35,304.00
Nasdaq futures (NQ=F): +40.75 points (+0.26%) to 15,246.75
Crude (CL=F): +$1.08 (+1.26%) to $86.51 a barrel
Gold (GC=F): +$5.90 (+0.33%) to $1,818.30 per ounce
10-year Treasury (^TNX): +1.1 bps to yield 1.879%
7:36 a.m. ET: Bank of America shares rise after posting solid 4Q results, led by consumer banking
Bank of America delivered fourth-quarter results that topped Wall Street's estimates on many major metrics, including in its key consumer banking business.
Total ending loan balances grew 6% to $979 billion at the end of the fourth quarter, which Bank of America attributed to strong commercial loan growth and higher card balances. In Bank of America's consumer banking division, net income grew 21% to $3.1 billion. The company also touted digital adoption of its consumer banking platforms, noting that it boasted 41.4 million active digital banking users for a rise of 5% over last year.
"Our fourth-quarter results were driven by strong organic growth, record levels of digital engagement, and an improving economy," CEO Brian Moynihan said in a press statement. "We grew loans by $51 billion and added $100 billion of deposits during the quarter, further strengthening our position as the leader in retail deposits."
Bank of America also brought in record quarterly investment banking fees of $2.4 billion. Elsewhere, however, the company also posted a drop in fixed-income trading revenue and a miss on equities trading revenue, echoing disappointing quarterly results in these business areas from other big banks including JPMorgan and Goldman Sachs from the past week.
6:01 p.m. ET Tuesday: Stock futures open slightly higher
Here's where markets were trading Tuesday evening:
S&P 500 futures (ES=F): +7.75 points (+0.17%), to 4,579.00
Dow futures (YM=F): +55 points (+0.16%), to 35,314.00
Nasdaq futures (NQ=F): +39 points (+0.26%) to 15,245.00
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter