Dow drops more than 500 points after massive rally the previous day

Stocks fell on Thursday, giving up some of the sharp gains seen in the previous session, as bond yields resumed their upward trajectory.

The Dow Jones Industrial Average was down 552 points, or 1.86%. The S&P 500 and Nasdaq Composite were down 2.31% and 2.92%, respectively.

The stronger-than-expected jobless claims report did not help boost sentiment, based on the notion that the Fed will continue to raise interest rates significantly to fight inflation without worrying that it will hurt the labor market.

The 10-year US Treasury yield rebounded to trade at around 3.79%. The day before, it posted its biggest one-day drop since 2020 after briefly topping 4%.

His holding yield, like that of two to five years, is about as high as it has been since 2007. So, investors are clearly comfortable with a low rate environment and that has changed in a matter of months. Which led to such quick sales.

Apple shares fell 3.7 percent after Bank of America Technology inventory downgraded to neutral from buy And he lowered his target price, citing a weak consumer.

The moves came on the heels of a broad rally in shares on Wednesday, Bank England said it would buy bonds in an effort to help stabilize its financial markets and the British pound. The pound sterling fell to Record lows against the US dollar in the last days.

It was a stark departure from the violent tightening campaign many global central banks have taken to deal with rising inflation.

On Wednesday, the Dow rose more than 500 points, or 1.9%, while the S&P 500 rose nearly 2% after hitting New bear market decline Tuesday. Both indicators cut loss lines for six days.

“We are skeptical that the calmer mood in the markets on Wednesday marks the end of a recent period of high volatility or risk-off sentiment. For a more sustainable rally, investors will need to see convincing evidence that inflation is under control, allowing for a more sustainable rally,” Mark Heffel wrote of UBS said in a note on Thursday that “banks become less hawkish”.

Wednesday’s rally put the major averages on pace for a losing week and their worst month since June. The Nasdaq Composite is leading the monthly losses, down about 8.4%, while the Dow and S&P are closing down 7% and 7.5%, respectively.