DeFi expert Jim Bianco joins Jared Blikre to break down an interesting year ahead on Wednesday, 1/12 at 2PM ET.
Stocks sold off Wednesday afternoon, with a slide in technology stocks accelerating into market close as investors digested the Federal Reserve's latest meeting minutes suggesting a potentially quicker path toward raising interest rates.
The Nasdaq Composite slid by about 3.3% in its worst day since February 2021 as a rout in technology stocks deepened. The S&P 500 dropped by nearly 2%, with the interest-rate sensitive real estate sector underperforming alongside information technology and communication services stocks. The Dow dropped nearly 400 points, or more than 1%.
Investors eyed the minutes from the Federal Open Market Committee's (FOMC) December meeting, which suggested the central bank was considering a faster removal of its monetary policy accommodation than previously anticipated. Policymakers suggested that against the backdrop of a firming economic recovery and elevated inflation, interest rates could rise sooner than anticipated. And some policymakers also telegraphed they would opt for shrinking the Fed's balance sheet soon thereafter.
"Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated," the minutes said. "Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate."
Treasury yields jumped to build on gains after moving sharply higher on Monday and Tuesday, which had added pressure to technology and growth stocks valued heavily on future earnings potential. The benchmark 10-year jumped to a 9-month high of more than 1.7% following the release of the Fed's meeting minutes Wednesday afternoon.
"The meeting minutes further confirm the Fed’s recent hawkish shift and its desires to start to remove monetary accommodation this year," Lawrence Gillum, Fixed Income Strategist for LPL Financial, said in an email Wednesday morning. "While most of the information was known, that 'some' members wanted to start to reduce the Fed’s $8.5 trillion balance sheet soon after the first-rate hike is likely going to be further scrutinized in upcoming meetings."
"Seems like the Fed wants to move quicker than it has in the past and yields, across the curve, are moving higher at the prospects of a quicker tightening timeline," Gillum added.
Earlier Wednesday morning, investors also digested fresh upbeat economic data, as private payroll gains handily exceeded estimates for December. ADP said Wednesday that private sector employers added back 807,000 jobs during the final month of November, nearly doubling expectations as job growth picked up to help alleviate some labor shortages.
Here were the main moves in markets as of 4:02 p.m. ET:
S&P 500 (^GSPC): -92.87 (-1.94%) to 4,700.67
Dow (^DJI): -392.35 (-1.07%) to 36,407.30
Nasdaq (^IXIC): -522.54 (-3.34%) to 15,100.17
Crude (CL=F): +$0.07 (+0.09%) to $77.06 a barrel
Gold (GC=F): -$4.40 (-0.24%) to $1,810.20 per ounce
10-year Treasury (^TNX): +3.7 bps to yield 1.7050%
Bitcoin prices fell more than 1% Wednesday afternoon to trade just above $46,000, with digital currencies coming under pressure alongside the drop in large-cap tech stocks.
Publicly traded companies with exposure to bitcoin also dropped. Bakkt (BKKT) shares fell more than 7%, while Marathon Digital (MARA) and Riot Blockchain (RIOT) were also each lower by more than 9% and 7%, respectively, during intraday trading.
Shares of software behemoth Microsoft (MSFT) were on track to fall for a fifth straight day on Wednesday, falling by as much as 2.5% at session lows.
If Microsoft shares end the session lower, it would mark the stock's longest losing streak since September. The drop came amid a broader drawdown in highly valued technology and growth stocks, in part coming as Treasury yields rose and pressured lofty tech valuations.
The Nasdaq-listed company BTCS Inc. announced Wednesday that it will be the first publicly traded U.S. firm to offer investors the ability to receive a dividend issued in Bitcoin.
The data analytics and blockchain company said shareholders can receive a cash dividend worth 5 cents per share or the equivalent in Bitcoin, which the firm is calling a "Bividend." Investors will need to opt-in with their choice by March 16, ahead of a record date of March 17.
"This is a moment we have long anticipated since the Company purchased the domain, bividend.com, in February 2015," BTCS CEO Charles Allen said in a press statement. "BTCS is now in the financial position required to execute on the Company’s vision.”
The company, based in Silver Spring, Maryland, said it is "evaluating the appropriateness of future Bividends."
Here's where markets were trading just after the opening bell:
S&P 500 (^GSPC): -6.35 (-0.13%) to 4,787.19
Dow (^DJI): -10.76 (-0.03%) to 36,788.89
Nasdaq (^IXIC): -69.27 (-0.47%) to 15,548.99
Crude (CL=F): +$0.95 (+1.23%) to $77.94 a barrel
Gold (GC=F): +$13.30 (+0.73%) to $1,827.90 per ounce
10-year Treasury (^TNX): -1.7 bps to yield 1.649%
Private sector employers added back far more jobs than anticipated in the final month of 2021, suggesting at least some widespread job vacancies were getting filled across the economy.
ADP said Wednesday that private payrolls grew by 807,000 in December. This was nearly double the 410,000 consensus economists expected, according to Bloomberg data. Employers had brought back 505,000 jobs in November, according to ADP's revised estimate for that month.
The ADP report serves as one measure setting expectations for the "official" government jobs report due out on Friday from the Labor Department. However, ADP's print during the pandemic especially has served as an imperfect indicator of what to expect from the Labor Department's reports. In three of the past four months, ADP's print overshot the Labor Department's payrolls figure, which last came in at a disappointing 210,000 for November.
Here's where markets were trading ahead of the opening bell:
S&P 500 futures (ES=F): -3.25 points (-0.07%), to 4,781.00
Dow futures (YM=F): -1 point (-0.00%), to 36,674.00
Nasdaq futures (NQ=F): -56.5 points (-0.35%) to 16,219.25
Crude (CL=F): -$0.04 (-0.05%) to $76.95 a barrel
Gold (GC=F): +$4.70 (+0.26%) to $1,819.30 per ounce
10-year Treasury (^TNX): -1.5 bps to yield 1.651%
Here's where markets were trading Tuesday evening:
S&P 500 futures (ES=F): -0.75 points (-0.02%), to 4,783.50
Dow futures (YM=F): -12 points (-0.03%), to 36,663.00
Nasdaq futures (NQ=F): -9.5 points (-0.06%) to 16,266.25
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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