The New York stock market closed mixed as major tech stocks fell sharply.
The Dow Jones 30 industrial average rose 19.80 points or 0.06 percent to 34,133.03 on the New York Stock Exchange (NYSE) on the 4th (ET).
The Standard & Poor’s 500 index fell 28.00 points (0.67 percent) to 4.164.66. While the tech-heavy Nasdaq index plunged 261.61 points (1.88 percent) to 13,633.50.
Investors watched Treasury Secretary Janet Yellen’s comments, economic indicators and inflation concerns.
The fall in the stock market widened as Treasury Secretary Yellen said in an interview with a magazine that interest rates could have to be raised slightly. This is to prevent the economy from overheating. The Nasdaq had its worst day since March. The Dow pulled off an upturn thanks to sensitive stocks.
In an interview with The Atlantic, Yellen said interest rates may have to rise slightly to prevent the economy from overheating.
Tech stocks fell: growing pressure to adjust
Growth stocks, such as tech stocks, can receive the hard hit if future earnings are shelved and interest rates are raising.
The Federal Reserve still needs economic easing and it’s not time to talk about tightening. But Yellen’s remarks, former Fed chairman and current Fed chairman, were enough to fuel market jitters.
Until now, concerns raise in the market that the Fed could raise interest rates earlier than expected. Because of inflationary pressures stemming from the resumption of the economy.
Furthermore, as the major U.S. index moved near its all-time high, the pressure on the adjustment increased.
Apple shares fell more than 3%, and Amazon shares fell more than 2%. Shares of Tesla, Alphabet and Microsoft also fell more than 1 percent.
The performance of companies that announced their earnings on the day exceeded expectations. But most stocks fell due to growing pressure to adjust.
Pharmaceutical company Pfizer, which announced its pre-opening earnings, rose slightly on news that its quarterly earnings exceeded market expectations. And it raised its earnings forecast for this year.
The U.S. Department of Commerce announced that the trade deficit in March was $74.4 billion, the largest ever. The figure was higher than the Wall Street Journal’s estimate of $74.8 billion. And exceeded $70.5 billion in the previous month.
The deficit is believed to have widened as imports increased more amid both exports and imports. This means that demand from consumers is increasing.
Factory re-orders in the U.S. rose 1.1 percent in March compared to the previous month.
This was less than the 1.3% increase in market expectations surveyed by the Wall Street Journal, but turned to an increase from a 0.5% drop in the previous month.
New York Stock Exchange experts said investors are likely to make profits in the past few months, given the share price’s growth rate.
“Considering the fact that the market has been particularly strong in the November-April period, investors may begin to see this as the right time to reduce the size of their investment,” said Sophie Griffith, a market analyst at Oanda in a report.
Dennis DeBusher, strategist at Evercore ISI, told CNBC, “Supply concerns are an important issue for investors, and inflation expectations are a headwind.”
“What’s important is inflation, and in the face of supply restrictions, stronger growth leads to higher inflation, and what that means for stocks,” he stressed.
According to the Chicago Mercantile Exchange (CME) Fedwatch, the Federal Fund (FF) rate futures market reflected the possibility of a 25bp rate hike in September at 11 percent.
On the Chicago Option Exchange (CBOE), the volatility index (VIX) rose 0.94 points, or 5.13 percent, to 19.25.