Stocks were mostly lower in afternoon trading on Thursday (US time), as another tick up in bond yields once again pulled down shares of technology companies and the energy sector.
In mid-afternoon trade, the S&P 500 index was down 0.8 per cent, the Dow Jones was flat and yhe technology-heavy Nasdaq Composite was 2.1 per cent lower.
Bank stocks were among the best performers as investors bet that higher interest rates would translate into higher profits. Industrial stocks also made solid gains.
The market touched new highs a day earlier after the Fed said US economic growth should rebound to 6.5 per cent this year — the strongest since the 1980s — and inflation will climb above 2 per cent for the first time in years.
“Early in a cycle you’re going to see higher inflation and higher interest rates and demand as global activity picks up,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
Bond yields ticked higher again, with the yield on the 10-year Treasury note rising to 1.73 per cent, near levels not seen since January 2020.
Big technology stocks continued to be volatile and move mostly downward, as the tick up in bond yields has made expensive technology stocks less attractive. Apple shares fell 2.4 per cent, Tesla was down 4.4 per cent, and Microsoft fell 2.1 per cent.
Investors have worried that if inflation picks up, central banks might respond by raising interest rates, which would cool economic growth. But Fed Chairman Jerome Powell’s comments at a news conference appeared to reassure them. Fed officials have said they would let the US economy “run hot” to make sure a recovery is gaining traction.