Stocks concluded the day with mixed results amidst choppy trading. The S&P 500 and Nasdaq 100 were largely flat, while the Dow Jones Industrial Average sold off by 0.31%, and the RSP dropped. Sector performance was predominantly negative, with Utilities, Materials, and Consumer Staples lagging. Communication Services, Health Care, and Energy, however, managed to outperform.
The market faced headwinds from surging oil prices, which fueled further selling in bonds and pushed 30-year Treasury yields to their highest since 2004. Brent crude briefly topped $106 a barrel. This bond market volatility contributed to concerns that elevated oil prices would stoke inflation, potentially forcing the Federal Reserve to implement additional interest rate hikes. Money markets are now fully reflecting expectations for three quarter-point Fed hikes over the next year, with some hedging for a fourth. Fed officials like Anna Paulson, John Williams, and Michael Barr have all indicated that further hikes might be necessary to bring inflation back to the target of 2%.
Adding to the day's complexities was a notable tumble by Oracle (ORCL), which fell after declaring force majeure at its New Mexico data center. This also impacted Bloom Energy (BE) and Blue Owl (OWL), both with exposure to the project. Although Oracle pared most of its losses, it still closed down by 3%. The artificial-intelligence-fueled rally that had driven the Nasdaq 100 to a recent record high began to peter out, as concerns grew that elevated bond yields were eroding the appeal of equities and pressuring valuations, particularly in the high-flying tech sector. Marvell Technology and Intel, for instance, both saw declines of about 3%. Initial jobless claims edged down to 197,000, continuing to suggest a stable labor market, with the unemployment rate expected to remain around 4.1%.
