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Nasdaq erases this year's gains in 3% rout, hits lowest level since Jan 29

Tesla Inc. dropped as much as 13% as investors continued to punish stocks that have led the rally from the depths of the pandemic a year ago

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Wall Street | Nasdaq

Bloomberg 

Nasdaq
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Technology shares sold off for a second day amid growing concerns that valuations for high-flying stocks are stretched as interest rates rise and the global economy moves closer to reopening.

The 100 slumped 3 per cent, the most in four months, as the tech-heavy gauge headed to its longest losing streak since 2019.

Tesla Inc. dropped as much as 13 per cent as investors continued to punish stocks that have led the rally from the depths of the pandemic a year ago. Cyclical shares set to benefit from the end of pandemic lockdowns outperformed, limiting losses for the Dow Jones Industrial Average. A similar rotation was underway in European stocks.

So-called growth shares are having their worst month against value counterparts in more than two decades as vaccination campaigns gather pace and bond yields climb. Bets on faster growth and higher rates have pushed the gap between 5- and 30-year yields to the highest level in more than six years.

Investors are growing concerned that broad equity benchmarks have already priced in much of the prospective global recovery spurred by vaccines and US stimulus. Another risk is that central banks may eventually start reconsidering emergency programs that have supported global

“We may be reaching the point at which it’s a less benign rotation, at which people start to worry about growth multiples,” Michael Shaoul, chief executive officer at Marketfield Asset Management, said in an interview on Bloomberg Television. “Equity indexes like the S&P 500 that are stuffed full of high-multiple, super-popular equities may start to struggle.”

Traders are waiting to hear from Federal Reserve Chair Jerome Powell when he testifies to the Senate Banking Committee on Tuesday and the House Financial Services panel the following day. He’s expected to play down the risk of inflation despite the size of President Joe Biden’s $1.9 trillion coronavirus relief proposal.

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First Published: Tue, February 23 2021. 20:39 IST
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