Tech rally sputters as yields rise before Powell
A rally in big tech fizzled out as bond yields rose, with traders wading through remarks from a slew of Federal Reserve officials and awaiting Jerome Powell's speech on Friday for clues on the outlook for interest rates.
The S&P 500 erased gains, while the Nasdaq 100 fell more than 1% — after rising about as much earlier in the day. The megacap space came under pressure, with Tesla Inc. and Apple Inc. each dropping at least 1.8%. Nvidia Corp. trimmed most of an advance that sent the chipmaker to an all-time high.
“Nvidia is the stock market's new Tesla, where the market blindly assigns a ridiculously high and unrealistic valuation,” said David Trainer, chief executive officer of New Constructs, an investment research firm based in Nashville. “We're not denying that Nvidia is a great company, but we are pointing out that its valuation is beyond lofty and unjustifiable.”
Traders are also bracing for the annual gathering of top central bankers in Jackson Hole, Wyoming, where Powell is scheduled to deliver a speech at 10:05 a.m. Washington time Friday. The Fed chief will likely use his platform to outline how officials will assess whether rates should go higher and determine when it's time to start cutting them.
Fed Bank of Philadelphia President Patrick Harker sees interest rates on hold for the rest of this year, and thinks policymakers have likely undertaken sufficient tightening, telling CNBC that “we've probably done enough.” Meantime, former Fed Bank of St. Louis President James Bullard said a reaccelerating US economy could prompt higher borrowing costs.
Treasury two-year yields, which are more sensitive to imminent policy moves, hovered near 5%. The dollar rose against all of its developed-market peers.
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