You never want to see “#stockmarketcrash” trending on Twitter, but that’s the kind of day Thursday was – or at least, the kind of day it looked like it was shaping up to be.
Selling started with an initial unemployment claims report that showed last week’s claims rise to 745,000, though Anu Gaggar, senior global investment analyst for Commonwealth Financial Network, reminds us to “take it with a grain of salt as there is some impact of the winter storm in Texas here.”
“Despite the rise and upward revisions, the four-week moving average in initial claims ticked lower to 791k, from 808k previously,” adds Barclays’ Michael Gapen and Pooja Sriram. “Initial jobless claims backed up in December and January following reductions in mobility and additional restrictions on activity that went into place in November to counter the rise in new COVID-19 cases last fall.”
But the drop-off accelerated after Federal Reserve Chair Jerome Powell told a Wall Street Journal webinar audience that although he acknowledged inflation could pick up further, the central bank was likely to stand pat on policy.
The Nasdaq Composite plunged by as much as 3.4%, and in fact fell into correction territory (a 10% decline from a previous high) on an intraday basis, before recovering a little. It still closed off 2.1% to 12,723, on the back of large declines from Tesla (TSLA, -4.9%) and Nvidia (NVDA, -3.4%), among others.
The Dow Jones Industrial Average (-1.1% to 30,924) and S&P 500 (-1.3% to 3,768) also finished in the red, though well off their lows.
Other action in the stock market today:
- The small-cap Russell 2000 dropped 2.8% to 2,146.
- Gold futures were off 0.9% to $1,700.70 per ounce.
- U.S. crude oil futures jumped by 4.2% to $63.83 per barrel after OPEC+ nations agreed to continue their production cuts into next month.
- That helped the energy sector lead again today, as evidenced by a 2.4% gain in the Energy Select Sector SPDR Fund (XLE), helped by a 3.9% surge in Exxon Mobil (XOM). The XLE is now up 35% year-to-date.
- Bitcoin prices, like the rest of the market, dipped but finished off their lows, declining 5.4% to $48,329. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
The Smart Money Says to Keep Calm
Inflation worries certainly have the market’s reins at the moment, but the tone from many market experts is: patience.
“Listen, the S&P 500 gained more than 75% and has started to weaken recently. Yes, the Nasdaq is nearly in correction territory, but the truth is this is how it works. Stocks are allowed to take a break,” says Ryan Detrick, chief market strategist for LPL Financial. “The bright side is the economy continues to improve and leadership from financials and energy is something that suggests this isn’t a ‘sell everything’ moment.”
“There’s a growing worry that the economy may be running away from the…