Stock Market Today: Dow in Biggest Loss Since 2020 as Tech Selloff Turns Ugly

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By Yasin Ebrahim – The Dow on Thursday suffered its biggest one-day slump since 2020, paced by an ugly selloff in technology stocks as Treasury yields climbed to multi-year highs a day after the Federal Reserve delivered its biggest rate hike since May 2000.

The Dow Jones Industrial Average slipped 3.1%, or 1,063 points, the S&P 500 fell 3.6% and the Nasdaq fell 5%.

Big tech was led lower by a more than 5% slump in Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB), with Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT) not far behind as rising Treasury yields, the enemy of growth stocks like tech, jumped.

The 10-year Treasury yield briefly jumped to 3.1%, its highest level since November 2018, a day after the Fed delivered a 50 basis points increase.

“There had been some hope that as the 10-year Treasury yield approach 3% things might stabilize,” Chief Strategist at Spouting Rock Asset Management Rhys Williams told in an interview on Thursday. “Over the last 15 years since the great financial crisis, economies have slowed once the rate on the 10-year Treasury crossed 3%. I think it’s a little bit disconcerting [that rates haven’t slowed], and that’s why the markets are reacting poorly to that,” Williams added.

As the 10-year yield breaks above 3%, it may soon run into levels that could offer resistance.

“The next objective for the 10-year Treasury yield would be about 3.25%. I think that’s the next reasonable point where you could see yields reset a little bit and see things sort of normalized,” Chief Market Strategist David Keller at told in an interview earlier this week.

Fed Chairman Jerome Powell on Wednesday downplayed the prospect of a larger 75 basis points rate hike, but said further 50 basis points rate hikes were in consideration in the coming months, keeping investor bets on the year-end Fed funds rates intact.

“[W]e now see a third 50bp rate hike as likely at the July FOMC [and] 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.

Twitter, bucked the big drop in tech, ending the day more than 2% following a CNBC report that Elon Musk is likely to become temporary chief executive of Twitter (NYSE:TWTR) after he completes his $44 billion take private deal of the social media platform.

Consumer discretionary stocks also added to the market turmoil, paced by selloff in the Etsy (NASDAQ:ETSY) and eBay (NASDAQ:EBAY) following guidance that spooked investors about the outlook ahead.

Etsy slumped more 16% as its better-than-expected first-quarter results were offset by second-quarter guidance weighed down by deteriorating macroeconomic conditions including the impact of inflation on the consumer.

“Management noted that the deceleration Etsy started to experience in February worsened throughout the quarter and continued into April (April also has difficult comps from stimulus in the US),” Wedbush said in a note.

eBay cut its full-year guidance and forecast softer growth for the second quarter, sending its shares more than 11% lower.

Energy stocks ended the day in the red even as oil prices climbed from the session lows after OPEC and its allies stuck to plans to lift production by 432,000 barrels per day from June.

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