1 min read.Updated: 26 Feb 2021, 05:24 PM ISTBloomberg
Contracts on the tech-heavy index dipped 0.5% in early US trading and S&P 500 futures lost 0.3%. Tesla sank 3% and Cathie Wood’s Ark Innovation ETF edged lower
The Nasdaq 100 Index is heading for the worst week since March, with futures pointing to deeper losses when US markets open on Friday.
Contracts on the tech-heavy index dipped 0.5% in early US trading and S&P 500 futures lost 0.3%. Tesla Inc. sank 3% and Cathie Wood’s Ark Innovation ETF edged lower. GameStop Corp. jumped almost 10% as enthusiasm for the video-game retailer once again gripped traders.
“On balance, the investment case for equities is still OK, but not spectacular," said Joseph Little, global chief strategist at HSBC Asset Management.
Stocks have slumped with week, sending the Nasdaq down almost 6%, amid a jump in Treasury yields and worries that markets are overheated. Still, there’s no shortage of investment strategists reminding clients that faster economic growth is a bullish driver for stocks while bond yields levels remain low compared with historical standards.
“We do not expect the rise in yields to derail the equity rally," Mark Haefele, chief investment officer of UBS Global Wealth Management, said in a note.
But even so, it’s clear that the speed of U.S. yields has caught investors by surprise, with many drawing comparisons to the 2013 taper tantrum -- a market panic sparked by fears that the Federal Reserve would curtail stimulus. The S&P 500 has slipped 2% so far this week, poised for the first back-to-back loss since October.
One indication that US investors are still jittery: the Chicago Board Options Exchange Volatility Index was near 28 on Friday, a relatively high level.
“In reality, it’s not the absolute level but the rapid pace of increase that worries risk investors," said Ipek Ozkardeskaya, a senior analyst at Swissquote. “We know that soaring yields is no good for the economy."
Outside of the US, the losses were deeper. In Asia, benchmark indexes fell more than 3% and investors sought a haven in the dollar.
Meanwhile, Virgin Galactic Holdings Inc. slumped 12% on a new delay to its next test flight to space. Other retail favorites showed signs of softening. Naked Brand Group and AMC Entertainment Holdings Inc. were down about 5%.