Treasury Yields Spike, Tech Stocks Dip – Here’s What the Market’s Bad Day Means for Retail Investors
On the heels of the Federal Reserve’s announcement that they would keep interest rates close to zero and were unconcerned about rising Treasury yields, tech stocks took a dip Thursday as the 10-year Treasury yield exceeded 1.7% for the first time since January 2020, Investor’s Business Daily reports. It went up to 1.75% before settling down to 1.72% by the end of the day, according to the Financial Times.
See: Google Searches for ‘Inflation’ Surge – Is It Time to Start Worrying About Higher Prices?
Find: Fed Meeting: Rates to Be Unchanged Until 2023
The Dow Jones Industrial Average rallied 151 points mid-morning since yesterday’s close to reach a record high of 33,166.67, before ending the day in the red, according to Seeking Alpha. The tech-heavy S&P 500, however, dipped 14 points to 3,959 mid-morning on Thursday and down to 3,915.46 by the end of the day, while the Nasdaq Composite was down 3% – “its worst day in four weeks,” reports the FT.
Yesterday, Federal Reserve Chair Powell said he would not taper the central bank’s Treasury bond purchases just yet, even though the Fed predicted inflation could reach as high as 2.4% this year. Inflation typically represents bad news for growth stocks, Barron’s reports, citing Netflix as one example of a stock that lost value Thursday.
Larger tech stocks were also down Thursday, with Tesla continuing its volatility to dip nearly 7% to $653.16 from an open of $684 this morning. Additionally, Apple dropped a little over 3%, and Amazon dropped nearly 3.5% to $3,027.99.
Although it may be tempting for retail investors to “buy the dip” and shore up their tech investments, that may not be the best move, experts say. If inflation continues, tech stocks could continue to dip. Bank of America strategists predict a 3% to 5% gain in the stock market over the coming decade, down from a 10% annual return in past years, Business Insider reports.
See: Economy Explained — What Is Inflation and What Does It Mean When It Goes Up or Down?
Find: Fed Chair Powell Testifies Before Congress: ‘Economy Will Depend on the Course of the Virus’
More from GOBankingRates
- If You Get a Stimulus Check, How Will You Use It? Take Our Poll
- How Long $1 Million in Savings Will Last in Every State
- Navy Federal Platinum Credit Card Review: Great for Balance Transfers and More
- 27 Ugly Truths About Retirement
