NASDAQ Sees Biggest Loss in Four Months02/25 15:59

   Rising bond yields triggered a broad sell-off on Wall Street Thursday that 
erased the market's gains for the week and handed the Nasdaq composite its 
biggest loss in nearly four months.

   (AP) -- Rising bond yields triggered a broad sell-off on Wall Street 
Thursday that erased the market's gains for the week and handed the Nasdaq 
composite its biggest loss in nearly four months.

   The S&P 500 dropped 2.4%, led lower by heavy selling in technology and 
communications companies. The tech-heavy Nasdaq fell 3.5%, its biggest skid 
since October.

   The sell-off took hold when the yield on the 10-year U.S. Treasury note rose 
to 1.53%, a level not seen in more than a year and far above the 0.92% level it 
was trading at only two months ago.

   Bond yields have been rising this month, reflecting growing confidence among 
investors that the economy is on the path to recovery, but also concern that 
inflation is headed higher. And every tick up in bond yields recently has 
corresponded with a tick down in stock prices.

   Thursday's move in the 10-year Treasury yield raised the alarm on Wall 
Street that yields, and the interest rates they influence, will move higher 
from here.

   "The yield on the 10-year note crossed the line in the sand at 1.50%, which 
from a technical perspective further confirms that higher rates are likely," 
said Sam Stovall, chief investment strategist at CFRA.

   The S&P 500 index fell 96.09 points to 3,829.34. The Dow Jones Industrial 
Average lost 559.85 points, or 1.8%, to 31,402.01. The Nasdaq slid 478.54 
points to 13,119.43.

   The economy grew at an annual pace of 4.1% in the final three months of 
2020, slightly faster than first estimated. The influx of new government 
stimulus efforts and accelerated vaccine distribution could lift growth in the 
current quarter, ending in March, to 5% or even higher, economists believe.

   "The bond market is reacting to the positive economic growth," said Brent 
Schutte, chief investment strategist, Northwestern Mutual Wealth Management 
Company. "It means there's some hope on the horizon."

   Technology stocks, which tend to have higher valuations, have been one of 
the victims of the rise in bond yields. As bond yields climb, more investors 
shift money into those higher yielding assets, which tends to negatively impact 
stocks that are priced for growth and not for regular dividend payouts.

   Apple, Amazon, Facebook and Microsoft --- all companies that pushed the 
stock market higher last year --- fell 2.4% or more.

   The market will likely see broader growth as actual economic growth widens 
to include many of the sectors that have been beaten down during the pandemic, 
Schutte said.

   Smaller company stocks fared worse than the rest of the market. The Russell 
2000 index of smaller company stocks lost 84.21 points, or 3.7%, to 2,200.17. 
The index has been far outpacing larger indexes, a signal that investors expect 
broader growth to continue. Schutte noted improvements in retail sales, the 
housing market and consumer confidence.

   "All those things are strong right now and the backdrop for further gains is 
still there," Schutte said.

   Global stock markets have soared over the past six months on optimism about 
coronavirus vaccines and central bank promises of abundant credit to support 
struggling economies. Those sentiments have faltered due to warnings the rally 
might be too early and that inflation might rise.

   On Wednesday, Federal Reserve Chair Jerome Powell affirmed the Fed's 
commitment to low interest rates in a second day of testimony to legislators in 
Washington.

   The central bank earlier indicated it would allow the economy to run hot to 
make sure a recovery is well-established following its deepest slump since the 
1930s. Powell said it might take more than three years to hit the Fed's target 
of 2% inflation.

   Investors also are looking for Congress to approve President Joe Biden's 
proposed economic aid plan. That includes $1,400 checks to most Americans. 
However, the plan faces staunch opposition from Republicans and is still 
subject to negotiations. Democrats have chosen to use the legislative process 
known as reconciliation that would allow them to pass the bill without GOP 
support.

   GameStop jumped 18.6% a day after the video game retailer's stock more than 
doubled. The stock has been mostly declining this month after skyrocketing 
1,600% in January as a large group of investors on Reddit and other social 
media sites encouraged each other to drive up the shares at the expense of 
hedge funds betting the stock would go lower.