U.S. stocks dropped for a second straight session on Wednesday as investors reassessed their bets on peak interest rates after economic data highlighted persistent inflationary pressures and Federal Reserve officials continued to sound hawkish. The Dow Jones Industrial Average (DJIA) fell 0.7% to 32,656.7, the S&P 500 (SP500) dropped 0.3% to 3,970.15, and the Nasdaq Composite (COMP) dipped 0.1% to 11,455.54.
The 10-year Treasury yield rose 8 basis points to 3.99%, while the 2-year yield rose 9 basis points to 4.89%. Bond yields have been rising in recent weeks as the Federal Reserve has suggested more rate hikes to come. Atlanta Fed President Raphael Bostic recently said that the key rate would have to be held at between 5% and 5.25% until “well into 2024” to ensure that inflation returns to the Fed's 2% target.
Looking at the day's key economic statistics, the ISM's gauge of manufacturing activity rose to 47.7 for February. After six months of no change, the figure rose, yet it stayed in a state of decline. The S&P Manufacturing PMI also rose for February to 47.3, slightly below the consensus for a rise to 47.8.
Stock market movers included 3M Co (MMM), which rose more than +2% after the company said U.S. Department of Defense records show that there was no hearing loss among a “vast majority” of plaintiffs in the Combat Arms earplug litigation. Meanwhile, Nvidia (NVDA) filed for a $10 billion mixed securities shelf offering, and its stock fell slightly in extended trade.
Elsewhere, Novavax (NVAX) plunged 25.9% after the vaccine maker said that although it has enough cash for the next 12 months or so, “substantial doubt exists regarding our ability to continue as a going concern through one year.The company's fourth quarter results were worse than anticipated, with both a larger-than-expected loss and lower-than-expected revenue.
Tesla (TSLA) Investor Day opened with expectations for major announcements. Despite speculation of a new EV being unveiled, Tesla executives said at the event that a next-generation platform or vehicle will come at a “later date.
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