Stocks end lower as Powell fails to calm fears about rising bond yields
The Nasdaq has been the laggard among the major indexes of late as bond yields have been spiking, and it was more of the same today. After spending the morning trading on either side of the flat line, the Nasdaq moved decisively lower, as did the Dow and S&P, after Federal Reserve Chair Jerome Powell spoke and didn't offer much when asked about rising bond yields. The 10-year yield climbed above 1.5% today following Fed Chair Powell's conversation on the U.S. economy at The Wall Street Journal Jobs Summit, even though it was not what he said so much as what he did not mention that undermined equity sentiment. Specifically, he did not push back against the recent surge in Treasury rates. Indeed, he said about the spike that he would be concerned by a "disorderly" move, providing what may have been read as tacit approval for the run-up in longer dated yields. Consequently, the stock market was dragged lower once again thanks to rising rates and expectations for more of the same as the economy and inflation pick-up further.
ECONOMIC EVENTS: In the U.S., initial jobless claims rose 9,000 to 745,000 in the week ended February 27. The Q4 productivity was revised slightly higher to a -4.2% contraction rate versus the -4.8% in the preliminary report. factory orders climbed 2.6% in January, better than expected
Oil futures prices jumped after Bloomberg reported that the OPEC+ alliance of oil producing nations "surprised" with a decision to keep production levels unchanged in April.
TOP NEWS: Shares of Snowflake (SNOW) closed fractionally higher after the company reported earnings last night. Following the report, Deutsche Bank analyst Patrick Colville upgraded Snowflake to Buy from Hold, telling investors that he sees Snowflake's growth as suggestive of a "very large" total addressable market and a "clear product market fit."
In M&A news, Amgen (AMGN) announced an agreement to acquire Five Prime Therapeutics (FPRX) for $38 per share in cash, representing an equity value of approximately $1.9B, in order to add Five Prime's pipeline to its own oncology portfolio. Following the announcement, Amgen shares are 1% higher near noon, while Five Prime's shares jumped almost 79%.
Also on the deal-making front, Square (SQ) announced an agreement to acquire a majority ownership stake in Tidal, the global music and entertainment platform. Square expects to pay a mix of cash and stock of $297M for a significant majority ownership stake, and existing artist shareholders will be the remaining stakeholders. Tidal board member and shareholder Shawn "JAY-Z" Carter is expected to join Square's board subject to the closing of the transaction, said the company, which added that it does not expect Tidal's financial results to have a material impact on Square's consolidated revenue or gross profit in 2021.
Meanwhile, Raytheon (RTX) shares finished fractionally lower after Bloomberg reported that the company is mulling a $1B sale of its services unit. The company is working with an adviser to look at strategic options for the unit, which is likely to draw interest from private equity firms, according to Bloomberg.
Additionally, The Block reported that Charles Schwab (SCHW) is considering the possibility of launching a crypto brokerage.
MAJOR MOVERS: Among the noteworthy gainers was United Natural Foods (UNFI), which rose 5.3% after extending its distribution pact with Amazon's (AMZN) Whole Foods Market. Also higher were Kroger (KR) and Burlington Stores (BURL), which gained a respective 2.5% and 11.2% after reporting quarterly results.
Among the notable losers was Okta (OKTA), which declined 6.2% after reporting quarterly results and agreeing to acquire Auth0 in a deal valued at roughly $6.5B. Also lower after reporting quarterly results were Schrodinger (SDGR) and Vroom (VRM), which fell 26.8% and 28%, respectively.
INDEXES: The Dow fell 345.95, or 1.11%, to 30,924.14, the Nasdaq lost 274.28, or 2.11%, to 12,723.47, and the S&P 500 declined 51.25, or 1.34%, to 3,768.47.