Stocks Extend Declines, Led Lower by Tech Shares
U.S. stocks tank as Treasury yields surge; Biggest bitcoin fund sinks to a discount as traders flee.

U.S. stocks fell sharply Thursday as surging U.S. Treasury yields took the shine off stocks now that a strong economic recovery looked more certain and investors clung to concerns that inflation would rise.
The Dow Jones Industrial Average dropped 559.85 points, or 1.8%, to 31,402.01, slipping from a record high. The S&P 500 lost 2.5% to 3,829.34 in its worst day since Jan. 27. The tech-heavy Nasdaq Composite slid 3.5% to 13,119.43, posting its biggest sell-off since Oct. 28.
The major averages tumbled in a rapid fashion as the 10-year Treasury yield soared as high as 1.6% in a sudden move that some described as a “flash” spike. The yield later settled back down to around 1.52%, its highest level since February 2020.
“It is all about bond yields today,” said Ryan Detrick, chief market strategist for LPL Financial. “There was a flash spike in the 10-year yield and that upset the apple cart, as higher yields are spooking the stock market. Could there be more inflation coming than what most think? Although the Fed isn’t worried about that, the market might be.”
Alphabet, Facebook, and Apple all fell more than 3%, while Tesla dropped 8.1%. Microsoft shed 2%.
GameStop - The video game stock loved by Reddit users spiked again on Thursday after rising by more than 100% in the previous session. Shares of GameStop rose more than 18% but finished well off session highs.
Twitter – Shares of the social media company rose 3.7% after Twitter unveiled new growth goals for revenue and active users. The company says it wants to double its revenue by the end of 2023.
Moderna – The biotech stock rose 2.5% after revenue came in well ahead of expectations for the fourth quarter. The company generated $571 million in revenue, while analysts surveyed by Refinitiv were expecting $279 million. The loss per share was wider than expected, however. The company also raised the lower end of its guidance for vaccine manufacturing in 2021.
The $32 billion Grayscale Bitcoin Trust (ticker GBTC) has plunged 20% this week, outpacing a 13% decline in the world’s largest cryptocurrency. GBTC’s once-massive premium to its underlying holdings has evaporated as a result, with the price of GBTC closing 0.7% below its underlying holdings on Wednesday -- the first discount since March 2017, according to data compiled by Bloomberg.
The vanishing premium suggests that after billions poured into GBTC as investors sought exposure to Bitcoin’s dizzying rally, investors are looking for the exits as the climb stalls, according to Bloomberg Intelligence.
Inflation fears have risen in recent weeks amid a sharp rise in bond yields as policymakers debate another round of economic relief during the ongoing coronavirus crisis.
Bill Winters, CEO of Standard Chartered said the combination of ongoing “very accommodative” monetary policy and “very substantial” fiscal impetus, particularly in the U.S., could lead to a temporary pickup in inflation.
“But for that to translate into real market volatility would probably require some other exogenous shock,” he added.
Tech worries
When asked whether soaring tech stocks could impact broader markets if they were to abruptly turn lower, Winters replied: “It is possible. We all remember the dotcom bubble very well and when the bubble bursts, of course it hit the technology sector, the dotcoms, very hard.”
“But it spilled over to the broader economy and some would say it even led to — with the benefit of hindsight — a very mild recession, even though it felt pretty acute at the time,” he continued.
“I think there is still a very active debate over what the value is for some of these tech stocks or tech giants. When we look at the follow through to the dotcom bubble and the number of companies that felt bubblish at the time that have gone on to have market values in excess of $1 trillion, who’s to say that they were not grotesquely undervalued at the peak of the dotcom bubble and not the other way around?” Winters said.
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