(Bloomberg) — The volatility that’s gripped financial markets this year tightened its hold on American stocks, with a late-session plunge sending the Nasdaq 100 Index into a correction.
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The tech-heavy benchmark wiped out a gain that reached 1.99% to post a 1.3% drop, leaving it more than 10% below its November all-time high. The selling spread to the S&P 500, which is now more than 5% off its all-time high set on the year’s first trading day. The reversal was sparked by news that Peloton Interactive Inc. was halting some production, sending the at-home darling to a 24% drop.
Nerves remained frayed on global equity markets with central banks set to tighten policy after almost two years of support that bolstered demand for risk assets. While selling in Treasuries eased Thursday, stock investors were taking few chances after Peloton’s warning and before major tech companies report earnings. Netflix Inc. plunged 10% in late trading after releasing results.
“It is a little discouraging that markets couldn’t hold on to gains seen earlier in the trading session,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors. “There are definitely some signs of panic out there.”
Read more: Surging Real Yields Jar Markets Eyeing End of Easy-Money Era
Data today showed U.S. jobless claims climbed last week to a three-month high, suggesting that the omicron variant could be having a bigger impact on the labor market. January’s Philadelphia Fed survey surprised to the upside, providing a counterpoint to the slump seen in the survey for New York state earlier this week.
On the company news and earnings front:
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Peloton tumbled on a report that it’s temporarily halting production of bikes and treadmills due to slowing demand.
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Alcoa Corp. rose after the aluminum producer predicted rising demand and warned that any conflict between Russia and Ukraine could deepen existing supply constraints.
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Union Pacific Corp. gained after profit topped analysts’ estimates and costs were kept in check while it work to untangle supply-chain knots.
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American Airlines Group Inc. reported a smaller-than-estimated loss in the fourth quarter and said ticket purchases are starting to recover.
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Travelers Cos. capped off 2021 with a record fourth quarter, beating analysts’ profit estimates on underwriting strength and investment gains.
The reporting season so far has been a little bit rocky, and investors need to monitor commentary from companies about price and wage pressures, Rebecca Felton, RiverFront Investment Group senior market strategist, said on Bloomberg Television.
“We do believe stocks can continue to go higher even as the Fed changes policy,” she said, adding corporate profits will still likely beat estimates.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
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The S&P 500 fell 1.1% as of 4 p.m. New York time
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The Nasdaq 100 fell 1.3%
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The Dow Jones Industrial Average fell 0.9%
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The MSCI World index fell 0.4%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.1305
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The British pound fell 0.2% to $1.3591
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The Japanese yen rose 0.1% to 114.20 per dollar
Bonds
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The yield on 10-year Treasuries declined four basis points to 1.82%
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Germany’s 10-year yield declined one basis point to -0.02%
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Britain’s 10-year yield declined three basis points to 1.23%
Commodities
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West Texas Intermediate crude was little changed
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Gold futures fell 0.3% to $1,840.30 an ounce
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