Thursday, February 2

Tech giants sank on Wall Street amid sharp rate hikes

Shares of Goldman Sachs fell after the investment bank missed quarterly earnings expectations on weak brokerage activity. The financial sector, which was one of the best performing groups in 2022, collapsed.

“The financial sector is crumbling a bit under the weight of some unimpressive quarterly results, which is probably the biggest factor today,” said Chuck Carlson, CEO of Horizon Investment Services.

“When one of the areas that was really working was removed, it kind of casts a shadow over the market,” he added.

Benchmark US Treasury yields jumped to two-year highs and two-year notes topped 1% as Traders braced for the Federal Reserve to be more aggressive in tackling inflation.

The strong jump in yields in early 2022 weighed heavily on technology and growth stocks, whose expected cash flows are discounted more heavily as yields rise.

“Inflation data has spooked the market because the Federal Reserve is going to act and that’s why we’re seeing this rise in yields”said Mona Mahajan, investment strategist at Edward Jones.

Investors are eyeing next week’s Federal Reserve monetary policy meeting for more clarity on the next moves by central banks to curb inflation.