Tuesday, January 18, 2022

DJIA: 35,368.47, down 543.34
S&P 500: 4,577.11, down 85.74
Nasdaq: 14,506.90, down 386.85
Stocks extend sell-off as bond yields spike

U.S. stocks finished broadly lower on Tuesday as investors monitored a persistent back-up in Treasury yields. The Dow slumped 543 points, posting its biggest one-day drawdown since November. The S&P 500 retreated 1.8% to its lowest point in nearly a month. The Nasdaq Composite tumbled 2.6% to a trough not seen since mid-October, nearing correction territory with the tech-heavy index closing 9.7% below its most recent November 19 record.

Growth-related shares came under pressure as Treasuries extended their recent rout amid ongoing inflationary concerns. The yield on the 10-year note jumped 10 basis points (0.10%) to 1.88%, while the two-year Treasury note yield spiked eight basis points (0.08%) to 1.04%, its highest level since February 2020. Market participants are bracing for tighter monetary policy ahead of the Federal Reserve’s January 25-26 meeting. On the data front, the Empire Manufacturing survey unexpectedly slipped into contractionary territory.

Ten of 11 S&P 500 sectors closed in negative territory. Technology stocks lagged the most with chipmakers leading the rout. Financials also underperformed amid a 7.1% drop in shares of Goldman Sachs Group Inc. after its latest profit tally fell short of estimates amid a drop in trading revenue. The investment bank also became the latest company to flag higher compensation costs, inciting worries of persisting inflation. Meanwhile, the Energy sector narrowly bucked the downtrend with West Texas Intermediate crude rallying 2.4% to $85.79/barrel, settling at the highest level since October 2014. In other corporate news, Activision Blizzard, Inc. surged 26.2% after Microsoft Corp. announced it would acquire the video game maker in a $68.7 billion all-cash deal.

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