Treasury Yields Spike, Tech Stocks Dip – Here’s What the Market’s Bad Day Means for Retail Investors

Apple Store
ThewayIsee / Shutterstock.com

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.

Building Wealth

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’

BoFa experts recommended investing in Energy and Materials, “two sectors most levered to inflation,” they said in a note.

More from GOBankingRates

About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.