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Stock Market News for Apr 11, 2022

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Wall Street had a mixed day on Friday, pulled down by poorly performing large-cap tech-stocks. Investors remained apprehensive about the economy slowing down as the Fed’s plans to rapidly hike interest rates surfaced. The 10-year treasury yield reached its highest level in three years. Two of the major indexes ended in negative territory while one, Dow, boosted by bank stocks rallying, ended in positive.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.4% or 137.55 points to close at 34,721.12. Seventeen components of the 30-stock index ended in the green, two remained unchanged, while 11 remained in red.

The tech-heavy Nasdaq Composite fell 1.3% or 186.30 points to close at 13,711.00 as tech-stocks declined.

The S&P 500 dipped 0.3% or 11.93 points to end at 4,488.28. Seven out of the 11 broad sectors of the benchmark index closed in the green.
The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Materials Select Sector SPDR (XLB) gained 2.8%, 1% and 0.6%, respectively, while the Technology Select Sector SPDR (XLK) dropped 1.4%.

The fear-gauge CBOE Volatility Index (VIX) was down 1.8% to 21.16. A total of 10.4 billion shares were traded on Friday, lower than the last 20-session average of 13 billion. Decliners outnumbered advancers on the NYSE by a 1.20-to-1 ratio. On Nasdaq, a 1.66-to-1 ratio favored declining issues.

Tech-Stocks Lead The Day’s Losses

Stock movement on Friday was majorly guided by The Fed’s plans to increase interest rates in order to rein in the highest inflation in 40 years. There have been concerns that this policy move, coupled with their plans to take liquidity out of the system could lead to a major slowdown of the economy, sending it to a recession.

Tech-stocks were the day’s biggest losers as investors considered them riskier in light of imminent interest rate hikes. Higher interest rates can make growth stocks, like those of the big tech companies, look overvalued compared to their earnings.

This saw stocks like NVIDIA Corporation (NVDA - Free Report) and Alphabet Inc. (GOOG - Free Report) fall sharply to end the day lower by 4.5% and 1.8%, respectively. Alphabet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The 10-year Treasury Yield Hits Three Year High

On Friday, the 10-year Treasury yield closed at 2.73%, a three-year high, putting the benchmark rate well above the 2-year bond. It had closed last week at 2.38% and had started the year at 1.63%. The 2-year bond had recently been hovering abovethe 10-year triggering a yield curve inversion, which is often seen as a precursor of recession.

Economic Data

The U.S. Census Bureau reported total inventories of merchant wholesalers were $818.2 billion at the end of February, up 2.5% from the revised prior period data. The increase in the prior period, January, was revised to 1.2% from an earlier reported 0.8%.

Weekly Roundup

Wall Street closed its first losing week in the last four weeks. All 3 major indexes finished in red. The Nasdaq Composite, S&P 500 and Dow went down 3.9%, 1.3% and 0.3% respectively over the week. Investor mood was dominated by fears of an economic slow-down coming out of the Fed’s plans to hike interest rates. Rapid course-correction of the U.S. 10-year bond yield curve allayed apprehensions about an impending recession, but investors kept monitoring the situation.


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