US stocks fell on Thursday as shares of tech companies slid in value amid potential early rate hikes from the Fed. Reportedly, officials are vying for higher interest rates to curb skyrocketing inflation.
The Nasdaq 100 lagged behind major benchmarks, and mega-cap stocks such as Tesla and Microsoft sank by more than 2.5%. Meanwhile, Boeing posted a rally after Bloomberg reported that the 737 Max is poised to resume commercial flights in China as early as this month.
"The committee has projected several hikes over the course of the year," said Fed Governor Lael Brainard. She added that the central bank may raise rates as early as March to ensure control over price pressures.
Alpine Woods portfolio manager Sarah Hunt commented: "We are in a position where much that has been positive for equities is maybe moving to neutral or negative, and while there are still few alternatives, it makes the equity market ripe for more fluctuations over the next few months as we see how the data shake out and how the Fed reacts."
Meanwhile, a recent survey indicated that Morgan Stanley clients expect financial stocks to perform better this year. 45% of respondents are betting that the industry will be the best in 2022, the highest proportion of votes for the sector since 2015.
Mortgage rates in the US are also rising for the third week, thereby reaching the highest level in almost two years. The average rate on 30-year loans is 3.45%, up from 3.22% last week. That is the highest record since March 2020.
Other news to watch out for today are:
- corporate sales report from Wells Fargo, Citigroup and JPMorgan;
- US data on business stocks, manufacturing, consumer sentiment and retail sales;
- speech of ECB President Christine Lagarde;
- speech of New York Fed President John Williams.