Nasdaq, S&P 500 end down after hitting record highs By Reuters

By Ambar Warrick and Noel Randewich

(Reuters) – The ended lower and the Nasdaq tumbled deep into negative territory on Monday after both earlier hit record highs following the announcement of a second term for Federal Reserve Chair Jerome Powell.

The ended slightly higher.

Climbing Treasury yields kept tech stocks broadly lower, with holdouts including Microsoft (NASDAQ:) and Apple (NASDAQ:), which many investors view as relatively safe, giving up gains late in the session.

Apple ended up 0.3%, its highest closing level ever, after rising over 3% earlier in the day. JPMorgan (NYSE:) flagged possible improvements to the supply of the iPhone 13 in coming months.

Microsoft ended down almost 1% after earlier rising almost 2%.

“The market is nervous. We know we have Powell, but that doesn’t help with the inflation issue,” said Dennis Dick, a trader at Bright Trading LLC. “Under the hood, growth tech got hit all day, and then all of tech got hit at the end.”

Powell’s nomination was welcomed by many investors hoping for no big changes in the Fed as it guides the economy through a recovery from the pandemic. The central bank is set to herald a return to pre-pandemic policy by end-2022.

Fed Governor Lael Brainard, who was the other top candidate for the job, will be vice chair, the White House said.

“Markets like predictability. … While Brainard may have been a fine choice, the markets would not know what to expect from her even though the general consensus was that it meant lower rates for longer,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab (NYSE:) in Austin, Texas.

The S&P 500 banks index rallied 2%, tracking a surge in Treasury yields as investors priced in policy tightening by the first half of 2022. Wells Fargo (NYSE:) & Co rose over 3% and was among the strongest major Wall Street banks. [US/]

Futures contracts tied to the Fed’s policy rate indicated that money markets are now expecting the U.S. central bank to raise interest rates by 25 basis points by next June versus a previous estimate of July.

The Dow Jones Industrial Average rose 0.05% to end at 35,619.25 points, while the S&P 500 lost 0.32% to 4,682.94.

The dropped 1.26% to 15,854.76.

The S&P 500 value index climbed 0.6%, strongly outperforming the S&P 500 growth index’s 1% dip.

In extended trade, Zoom Video Communications (NASDAQ:) jumped 6% after the video-conferencing company posted quarterly revenue that beat expectations.

Investors were awaiting a slew of economic data this week, including IHS business activity readings, personal consumption expenditure, and minutes of the Fed’s latest meeting.

In Monday’s session, Amazon (NASDAQ:) fell 2.8% and Alphabet (NASDAQ:) declined 1.8%, both weighing heavily on the Nasdaq.

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