US Stocks Sink, Tech And Real Estate Hit Hard Amid Rate Concerns, Dollar Surge: What's Driving Markets Wednesday?

Another day of losses shook up Wednesday’s stock trading session on Wall Street.

All major U.S. stock indices in the red, as investors expressed concerns that the Federal Reserve is not in a rush to reduce interest rates early this year.

Market-implied probabilities of a rate cut by the Fed in March have declined to as low as 50%, down from over 70% at the beginning of the week, following recent hawkish statements from the Fed officials and stronger-than-expected economic data.

On Thursday, retail sales figures for December exceeded expectations, rising by 0.6% month-over-month, surpassing the predicted 0.4%, and showing a year-over-year surge of 5.6%, marking the highest annual growth since January 2023.

Treasury yields inched higher, with the 10-year benchmark reaching 4.10%, and the dollar reached a monthly high. Virtually every sector recorded losses, with the most significant declines occurring in rate-sensitive sectors, specifically within real estate, consumer discretionary, and technology stocks.

The Nasdaq 100 declined by 1%, while small-cap stocks, as tracked by the iShares Russell 2000 ETF IWM, continued to underperform, falling by 1.6%.

Gold dropped by 1%, silver fell by 1.5%, and Bitcoin BTC/USD was down by 1.9%.

The CBOE Volatility Index, also known as ‘VIX’, rose over 8%, indicating rising investor fear in the stock market.

Wednesday’s Performance In US Major Indices, ETFs

The SPDR S&P 500 ETF Trust SPY fell 0.7% to $471.65, the SPDR Dow Jones Industrial Average DIA inched 0.3% down to $372.65 and the tech-heavy Invesco QQQ Trust QQQ was 1% lower to $405.66, according to Benzinga Pro data.

Sector-wise, almost all S&P 500 sectors recorded losses, with the Real Estate Select Sector SPDR Fund XLRE sharply underperforming, down 2.3%.

The Utilities Select Sector Fund XLU, Consumer Discretionary Select Sector Fund XLY and the Technology Select Sector Fund XLK followed suit, down 1.6%, 1.2% and 0.9% respectively.

The Health Care Select Sector Fund XLV was the only one flat for the day.

On an industry level, the SPDR S&P Insurance ETF KIE rose 0.2%. Solar stocks, as tracked by the Invesco Solar ETF TAN and gold miners, as monitored through the VanEck Gold Miners ETF GDX continued to underperformed, down 3.4% and 2.5% respectively.

Wednesday’s Stock Movers

Real estate stocks Boston Properties Inc. BXP and Healthpeak Properties Inc. PEAK recorded the largest losses within the S&P 500 index, down 4.5% and 4.2% respectively, amid rising risks that the Federal Reserve could postpone the start of its rate-cut cycle.

Other sector players, such as Vornado Realty Trust VNO and Kilroy Realty Corporation KRC, fell 5.6% and 4.7%, respectively.

Maplebear Inc. CART’s Instacart spiked over 8% after Wolfe Research upgraded the online grocery shopping company from peer performance to outperform. Wolfe Research analyst Deepak Mathivanan also speculated over a potential takeover bid from Uber Inc. UBER.

Shares of low-cost airline Spirit Airlines SAVE tumbled by over 20% Thursday, after falling as much as 47% Wednesday after a U.S. judge blocked the airline’s $3.8 billion merger with JetBlue Airways Corp. JBLU. The latter fell over 8% Thursday.

Meanwhile, EV-related stocks tumbled:

• Rivian Automotive Inc. RIVN fell over 8% after Deutsche Bank downgraded the company’s stock from buy to hold and cut its price target from $29 to $19.
• Tesla Inc. TSLA fell 2.8%, after UBS cut its price target from $250 to $229.
• Lucid Group Inc. LCID fell 5%, on track for its 13th negative session out of the last 14.
• Plug Power Inc. PLUG tumbled over 10%.

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