Tech companies led stock losses into another downward step for expensive growth stocks under threat of rising rates and inflation. Some corporate warnings about the negative impacts of the omicron coronavirus variant also soured sentiment.
The Nasdaq 100 fell about 2%, while 10-year Treasury yields climbed to 1.8%. Lululemon Athletica Inc. fell when the yoga pants maker said omicron was limiting its operations, while Torrid Holdings Inc. plunged after the plus size women’s clothing retailer cut its sales forecast, the variant causing disruption in its workforce.
Bitcoin fell for the fifth time in six sessions, giving it the worst start to the year since the early days of the digital alternative to money.
Markets face higher volatility as the pandemic liquidity that helped stocks reach record highs is withdrawn. The Federal Reserve will likely hike interest rates four times this year and begin its process of liquidating its balance sheet in July, if not sooner, according to Goldman Sachs Group Inc. [see earlier post].
A key measure of US inflation – due for release on Wednesday – is expected to have risen further in December.