Market Snapshot: U.S. stocks under pressure as rising bond yields send tech shares skidding

What’s driving the market?

The Federal Reserve on Wednesday boosted its outlook for robust economic growth, while Chairman Jerome Powell reiterated that policy makers want to see inflation push above its 2% target, accompanied by significant improvement in the labor market, before it will begin raising interest rates or pulling back on its program of asset purchases.

Read: What we learned — and what we didn’t — from Jerome Powell’s press conference

“You have a rapid economic recovery coming out from an induced coma, a Federal Reserve unwilling to pull back from emergency measures and large amounts of U.S. fiscal stimulus finding their way into equities by retail investors,” said Hussein Sayed, chief market strategist at FXTM, in a note. “However, this isn’t a ‘buy everything’ situation.”

Powell didn’t push back against a rise in long-term debt yields, which has seen the yield on the 10-year Treasury note TMUBMUSD10Y, 1.741% rise significantly over the past six weeks on expectations an economic recovery boosted by trillions of dollars in fiscal spending by the U.S. government will fuel inflation. The 10-year yield jumped more than 11 basis points Thursday morning to trade near 1.75%, hitting a 14-month high.

“The higher bond yields move from here, the more challenging it becomes for growth stocks to resume their upward trajectory,” Sayed said. “Highly priced tech stocks trading at elevated multiples compared to historic averages will likely remain under pressure in the short to medium term, so it makes sense to reduce their weight in portfolios.”

Meanwhile in U.S. economic data on Thursday, jobless benefit claims rose to the highest level in a month, up by 45,000 to 770,000 in the week ended March 12.

The Philadelphia Fed’s March manufacturing index unexpectedly jumped to 51.8 from a reading of 23.1 in February.

The February Index of Leading Economic Indicators is due at 10 a.m.

Which companies are in focus?

• Shares of Dollar General Corp. DG, -4.63% fell 6% after reporting earnings that fell short of expectations.
• Accenture PLC ACN, +2.05% shares rose 0.8% after the company topped earnings and revenue forecasts and raised its outlook, while also increasing what it will return to shareholders and announcing a bonus for employees.
•  Shares of Lordstown Motors Corp. RIDE, -11.40% were down more than 8% after the electric-truck maker late Wednesday reported a wider quarterly loss late Wednesday, reiterating its goal of making its first electric pickups by late September despite a continuing spat with a short seller. The company also disclosed a probe by securities regulators.

How are other markets trading?

• The ICE U.S. Dollar Index DXY, +0.42%, a measure of the currency against a basket of six major rivals, was up 0.4%.
• Oil futures were under pressure for a fifth straight session, with the U.S. benchmark CL.1, -2.40% down 1.7% near $63.53 a barrel.
• Gold futures edged lower, with the April contract GCJ21, -0.27% down 0.4% at $1,719.30 an ounce.
• The Stoxx 600 Europe index SXXP, +0.02% was little changed, while London’s FTSE 100 UKX, -0.20% edged down 0.2%.
• In Asia, the Shanghai Composite SHCOMP, +0.51% rose 0.5%, while Hong Kong’s Hang Seng Index HSI, +1.28% was up 1.3% and Japan’s Nikkei 225 NIK, +1.01% gained 1%.