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Dow slides, Nasdaq hits three-month low as Powell tries to soothe bond market

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 Stock benchmarks on Thursday fell for the third day, led by technology stocks, as Federal Reserve Chairman Jerome Powell said he was monitoring the recent rise in bond yields but added that the rise in inflation expected this year was unlikely to last and current monetary policy remained appropriate.

Powell said inflation is likely to rise as the economy recovers, but he thinks it will be temporary. Without more durable inflation and a return to full employment, he said the central bank is unlikely to raise interest rates.

The 10-year Treasury yield jumped back above 1.5% following Powell’s comments. The benchmark rate had stabilized earlier this week after a spike to 1.6% last week amid higher inflation expectations.

Futures on the Dow Jones Industrial Average dipped 173 points. S&P 500 futures and Nasdaq 100 futures also traded in negative territory. Energy outperformed with a 2.5% gain in the previous session amid a jump in oil prices.

Tech stocks led the market decline as growth-oriented companies tend to be more vulnerable to higher interest rates. The Nasdaq Composite dropped 2.1%, bringing its losses this week to 3.6%. The tech-heavy benchmark also turned negative for the year and fell into correction territory, or down 10% from a recent high, on an intraday basis.

Costco shares fell 1.3% after the company posted mixed fiscal second-quarter results. Shares of the chipmaker Broadcom slid 2.8% despite the company reporting better-than-expected earnings for the first quarter.

Clothing retailer GAP stock gained 4.7% as traders weighed the company’s latest quarterly results. Gap reported revenue of $4.42 billion. Imax shares climbed 4.3% after the company reported mixed fourth-quarter results. The company posted a loss per share of 21 cents.

Shares of Reddit-darling GameStop climbed, rising more than 20% at one point in yet another unexplained move that left market watchers looking for a possible catalyst. The stock closed up 6.4% at $131.93 after earlier hitting $147.87, its highest since a surge in the heavily shorted stock late last month.

Meanwhile, on the COVID front, Connecticut has joined Texas and Mississippi in easing restrictions, while Alabama extended its mask mandate. Dr. Anthony Fauci said on Thursday that U.S. service members who are eligible to get the vaccine but opt out are inadvertently “part of the problem” of lengthening the pandemic.

“You’re part of the solution to this outbreak,” explained Fauci to a virtual audience during a town hall with Blue Star Families, a non-profit dedicated to issues facing military families.

 

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