Tech shares underneath siege as Fed’s Powell heads to Capitol Hill

Brian Belski, chief strategist at BMO Capital Markets, assesses the future of markets.

US stock markets were lower on Tuesday, and Big Tech was under pressure for a second straight session as traders grappled with the possibility of impending inflation, as Fed chairman Jerome Powell testified for two days from Congress.

ticker safety Latest change Change%
I: COMP NASDAQ COMPOSITE INDEX 13226.681397 -306.37 -2.26%
SP500 S&P 500 3838.77 -37.73 -0.97%
Me: DJI DOW JONES AVERAGE 31327.53 -194.16 -0.62%

The Nasdaq Composite fell more than 2% as of Monday, hit its lowest level since February 1. The Dow Jones Industrial Average fell 77 points, or 0.24%, in the first few minutes of trading, while the S&P 500 fell 0.88%.

Powell, who will appear before the Senate and House committees on consecutive days, will seek the Fed’s course in dealing with the reopening of the economy and inflation that could result from the unprecedented amount of fiscal and monetary incentives that have been injected into the financial system.

Fears of inflation in the bond market have already increased, as the 10-year reference yield has risen by 46 basis points to 1.37% this year. Some Wall Street strategists fear that a move above 1.5% would be problematic for the stock market.

ticker safety Latest change Change%
AMZN AMAZON.COM INC. 3,133.13 -47.61 -1.50%
TogetL ALPHABET INC. 2,020.17 -34.09 -1.66%
AAPL APPLE INC. 121.99 -4.01 -3.18%
MSFT MICROSOFT CORP. 231.53 -2.98 -1.27%

The trillion dollar companies Amazon Inc., Alphabet Inc., Apple Inc., and Microsoft Corp. stayed in stocks. a second day in the crosshairs.

ticker safety Latest change Change%
TSLA TESLA INC. 672.30 -42.20 -5.91%

Elsewhere, Tesla Inc. shares were on the brink of a bear market after the previous session closed 19% below their January high. The majority of those losses occurred in the last two sessions as Bitcoin sold heavily. Tesla announced a $ 1.5 billion investment in the cryptocurrency earlier this month but is still ahead on its purchases.

ticker safety Latest change Change%
HD THE HOME DEPOT INC. 259.66 -16.47 -5.96%
M. MACY’S INC. 14.57 -0.70 -4.61%

In terms of earnings, Home Depot Inc. had profits and sales that exceeded Wall Street estimates but did not provide an outlook due to uncertainty surrounding COVID-19 and the impact on consumer spending.

Macy’s Inc. reported a 17% year-over-year decline in sales in the same store, but the retailer still saw its only quarterly profit in fiscal 2020. The department store chain forecast sales for the current year that exceeded analysts’ expectations.

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Meanwhile, AMC Entertainment Holdings Inc. was in focus after New York City announced that theaters could open at 25% capacity from March 5th.

In commodities, West Texas Intermediate crude lost 25 cents to $ 61.45 an ounce and gold fell $ 2.60 to $ 1,807 an ounce.

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The European markets traded mixed with the French CAC 40 up 0.06%, the British FTSE 100 up 0.12% and the German DAX 30 up 1.02%.

In Asia, China’s Shanghai Composite was down 0.17%, Japan’s Nikkei 225 was up 0.46% and Hong Kong’s Hang Seng was up 1.03%.

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