Market Slides on Fears of Aggressive Fed Rate Hikes; CSCO, ROKU Report Positive Results
Investors sent stocks lower on Thursday as fears of an overly aggressive Federal Reserve rate hike weighed on markets. The Nasdaq Composite (COMP.IND) fell 1.6%, the benchmark S&P 500 (SP500) declined by 1.3%, and the Dow (DJI) slid 1.4%. This came after St. Louis Fed President James Bullard and Cleveland Fed President Loretta Mester backed more aggressive action from the central bank to bring down inflation.
Despite the market's overall decline, some stocks managed to rise after better-than-expected quarterly results and profit guidance. Cisco Systems (CSCO) was the leader in the S&P 500, climbing 5.2% after the network equipment maker reported fiscal second-quarter earnings of 85 cents per share on $13.6 billion in revenue, more than analysts were expecting. CSCO also raised its full-year outlook and its dividend.
Roku Inc (ROKU) also saw an impressive pre-market surge, climbing about 10% after the company reported upbeat Q4 results and posted a better-than-expected forecast for the current quarter.
There are concerns that the Federal Reserve may increase interest rates more than what is currently expected and keep them elevated for a longer period of time, due to recent economic data. S&P Global's manufacturing and services purchasing managers’ indices for February are due at 9:45 a.m. EST and are expected to show that activity, although improving, continued to contract. The market is now pricing in a quarter-point increase in interest rates at each of the central bank's next three gatherings.
On Tuesday, the Commerce Department reported that retail sales had increased by 3% in January, reversing the two months prior which had seen a decline. This, in addition to higher-than-anticipated consumer prices, has unsettled investors who fear the Federal Reserve may raise interest rates further. Meanwhile, the yield on the benchmark 10-year Treasury note inched up 1 basis point to 3.87% and bitcoin (BTC-USD) rallied by 8.5% in the last 24 hours to US$24,065.86.
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