Major Indexes Fall On Rate Path and Terminal Rate Worries

Barry Adams
07 Mar, 2023
New York City

The uptick in Treasury yields came together with a weakness in high-growth and tech stocks after the Federal Reserve chairman delivered a hawkish sentiment in his prepared remarks for lawmakers. 

Federal Reserve chairman Jerome Powell said the central bank is ready to increase rates faster if incoming data supported the case.

Moreover, Powell added that the terminal rates are likely to be higher than previously estimated. 

Chairman Powell noted that latest economic data have been stronger-than-anticipated and to bring down inflation to 2% and restore price stability will require raising rates to restrictive levels. 

At the Fed's policy meeting in February, the committee raised the target range for federal funds by 25 basis points to between 4.5% and 4.75%, the highest level since 2007.  

The talk of faster rate hikes and higher terminal rates spooked investors and tech stocks accelerated the decline in early trading. 

 

Indexes & Yields 

The S&P 500 index decreased 0.6% to 4,023.25 and the Nasdaq Composite index fell 0.6% to 11,602.35. 

The yield on 2-year Treasury notes inched higher to 4.96%, 10-year Treasury notes inched higher to 3.98% and 30-year Treasury bonds edged higher to 3.90%.  

Crude oil fell 94 cents to $79.54 a barrel and natural gas prices increased 5 cents to $2.63 a thermal unit. 

 

U.S. Stock Movers 

Dick's Sporting Goods Inc increased 9.2% to $144.28 after the specialty retailer reported higher-than-expected sales in the holiday period. 

Profit in the fourth quarter declined 32% despite sales rising 7.3% in the period, hurt by lower gross margin. 

 Net sales in the quarter rose 7.3% to $3.60 billion from $3.35 billion in the previous year and comparable store sales rose 5.3%.

Net income fell to $235.6 million or $2.60 per share from $346.1 million or $3.16 per share in the prior-year quarter.

Excluding items, adjusted income decreased to $2.93 per share from $3.64 a year ago. 

JetBlue Airways Corporation declined 0.2% to $8.39 and the Justice Department sued the company to block its proposed takeover of the discount airline Spirit Airlines.  

Rivian Automotive Inc plunged 12% to $15.02 after the electric vehicle maker said it plans to offer $1.3 billion convertible debt amid growing demand slump. 

The electric vehicle maker lost $6.8 billion in 2022 and after supply chain issues negatively impacted production. 

Meta Platforms Inc increased 1% to $186.33 after a Bloomberg report said that the parent of Facebook is planning to layoff thousands of employees as early as this week.