Coffee With Greta: Tech Decline


DJIA Futures: -113 (-0.3%)

SPX Futures: -17 (-0.4%)

NASDAQ Futures: -83 (-0.5%)

Good morning friends!

Futures are dropping as traders continue to sell-off big tech stocks.

Let’s get right to it!

Tech Slide Continues

Tech stocks are leading the decline again this morning after the Nasdaq logged its worst day since October on Tuesday. 

Apple (AAPL) shares are down 0.4% ahead of the open with other Magnificent 7 names like Nvidia (NVDA), Tesla (TSLA), and Meta (META) all falling more than 1%. 

The pullback in tech also comes as Treasury yields push higher. 

The 10-year yield is up three basis points at 3.97% while the 2-year yield is up two basis points at 4.35%.

Hawkish Fed Comments

Richmond Fed President Thomas Barkin refuses to say rate hikes are definitely done. 

Speaking at an event this morning, Barking said hikes remain “on the table” if inflation does not continue on a downward path. 

But he also expressed optimism about the chance for a soft landing saying, “Now, everyone is talking about the potential for a soft landing, where inflation completes its journey back to normal levels while the economy stays healthy. And you can see the case for that.”

Barkin compared the Fed’s fight against inflation to landing an airplane, he said, “The airport is on the horizon. But landing a plane isn’t easy, especially when the outlook is foggy, and headwinds and tailwinds can affect your course. It’s easy to oversteer and do too much or understeer and do too little.”

CME Group’s FedWatch Tool still shows over 67% of traders expecting the Fed’s first rate cut at the March 20 meeting. 

The Fed releases the minutes of its December meeting at 2:00 p.m. ET which will give more insight into the discussion around the updated dot plot which showed plans for three rate cuts this year.

Mortgage Demand Drops 

Mortgage demand tumbled at the end of 2023 despite lower rates. 

The Mortgage Bankers Association reported total application volume dropped 9.4% last week compared with two weeks earlier. 

Purchase applications ended the year 12% lower compared to a year ago while refinance applications were up 15% year over year. 

The average 30-year fixed contract rate ended 2023 at 6.76%.

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