Nasdaq 100 Routed as Yields Rise, Earnings Add to Disappointment

Tech shares got here below strain throughout commerce as fears over rising yields permeated the market. Simply minutes after the opening bell, the yield on the US 10Y Treasury surpassed the dividend yield of the S&P 500, sending markets into retreat. The Nasdaq 100 Index completed the day down 478 factors, or 3.43%.

Nasdaq 100 1 Minute Chart

Chart created with TradingView.

Elsewhere, AirBnb posted a combined earnings report after the shut on Thursday, beating income expectations however lacking earnings estimates. The steep This fall loss was fueled by the COVID-19 pandemic, but additionally inventory compensation expenses tied to the corporate’s IPO. Shares nevertheless, moved greater within the afterhours session regardless of the disappointing EPS print.

AirBnb 1 Minute Chart

Chart created with TradingView.

DoorDash reported its first earnings following the corporate’s current IPO. Regardless of beating income estimates for This fall, DoorDash missed EPS estimates by $2.00, posting GAAP EPS of -$2.67. The corporate additionally reported a major lack of $312 million, most of which was attributed to the corporate’s IPO and inventory compensation. Revenues, which beat estimates, represented y/y progress of 226%. The inventory, which was down 5% throughout commerce, prolonged its losses and fell 11% through the afterhours session.

Rising inflation expectations have despatched bond yields hovering in current weeks, though present ranges stay low from a historic perspective. The transfer in yields has seen a major shift in investor sentiment, with speculative progress shares main the decline. AUD/USD and GBP/USD led declines within the FX house, whereas some growth-linked commodities continued to soar greater. The numerous reallocation displays rising concern about rising yields and their affect on valuation, which in response to many was already “stretched.”

The current pullback in equities comes in opposition to a backdrop of unprecedented macro-growth. Sectors that lagged significantly through the peak of the pandemic have blossomed because the world beings to reopen. Latest vaccine developments and promising financial knowledge have relieved strain from sure areas of the market, as buyers start to look to a “post-COVID” atmosphere. Financials, power, and small-caps all took a breather on Thursday, regardless of strongly outperforming the broader market in current weeks. To study extra concerning the current reallocation of capital, try an earlier piece from Peter Hanks right here.

— Written by Brendan Fagan, DailyFX Intern

To contact Brendan, attain out on Twitter @BrendanFaganFX