© Reuters
By Yasin Ebrahim
Investing.com – The Dow slumped Thursday, following a rout in technology stocks as Treasury yields climbed to multi-year highs a day after the Federal Reserve delivered its biggest interest rate hike in more than two decades.
The slipped 3%, or 1,004 points, the fell 4.7%.
Big tech was led lower by a more than 5% slump in Amazon (NASDAQ:) and Facebook (NASDAQ:), with Alphabet (NASDAQ:), Apple (NASDAQ:), and Microsoft (NASDAQ:) not far behind as rising Treasury yields, the enemy of growth stocks like tech, jumped.
The briefly jumped to 3.1%, its highest level since November 2018, a day after the Fed delivered a 50 basis points increase. The clear breakout above 3% will likely lead to a further climb in rates, which remain low compared to the long-term average.
“I would argue still from the long-term trajectory that we’re rotating from an era of historically low rates to more of a normal era,” Chief Market Strategist David Keller at StockCharts.com told Investing.com in an interview earlier this week.
“I think we still have a long way to go before we get to whatever that normal is. I don’t think that the market is really priced in the reality of what’s most likely to come in.”
Fed Chairman Jerome Powell on Wednesday downplayed the prospect of a larger 75 basis points rate hike, but said further 50 basis points were in consideration in the coming months, keeping investor bets on the year-end Fed funds rates intact.
“We see the FOMC raising rates by 25bp for the balance of the year, bringing the fed funds rate at the end of 2022 to 2.625%,” Morgan Stanely said in a note.
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