Shares on Wall Street reversed early gains as Treasury yields surged after US Federal Reserve Chair Jay Powell said 50 bps rate hikes (rather than 25 bps) are on the table. The Dow Jones Industrial Average lost 368.03 pts, or 1.05%, to close at 34,792.76. The S&P 500 index fell 1.48%. The tech-heavy Nasdaq Composite retreated 2.07%. The small-cap Russell 2000 dropped 2.29%.
Fixed income derivatives now reflect three 50 bps rate hikes through Jul, and began pricing in the first hint of a 75 bps move in May or Jun. The yield on the 10-year Treasury note notched up 7.75 bps to 2.9095%, while the 2-year treasury yields were up 10.69 bps to 2.6822%.
Mega cap tech stocks ended lower, including Apple (AAPL US, -0.48%), Microsoft (MSFT US, -1.94%), Amazon (AMZN US, -3.70%), Alphabet (GOOGL US, -2.52%), Nvidia (NVDA US, -6.05%), and Meta Platforms (FB US, -6.16%). Tesla (TSLA US, +3.23%) posted modest gains, despite announcing knock-out earnings.
Meanwhile, Tesla-founder Elon Musk unveiled a US$46.5b financing package to fund a Twitter (TWTR US, +0.77%) bid and is considering a tender offer for its shares, a filing with US regulators showed, according to Channel News Asia. United Airlines (UAL US) added 9.31% after forecasting a profit in 2022.
Warner Discovery (WBD US) retreated 6.78% after news of the company shutting down its CNN+ streaming service less than a month after it was launched.
Similarly, traders are betting on a more hawkish European Central Bank (ECB). Derivatives indicator the ECB will lift rates above zero by the end of the year.
The front-month Brent and WTI futures closed up $1.53 at US$108.33/bbl and $1.04 at US$103.79/bbl respectively.
The ICE dollar index (DXY), which measures the strength of the greenback against a basket of currencies, rose 0.19% to 100.578.
The most actively traded US gold futures (Jun) contracts settled down $7.40, or 0.4%, at US$1,940.20/oz. May silver, which is the most actively traded silver futures, fell 65 cents, or 2.6%, to end at US$24.621/oz.
European equity markets finished mixed on Thur. The UK FTSE lost 0.02%, France's CAC 40 rose 1.36%, while the German DAX advanced 0.98%.