Stocks and bonds sold off after Federal Reserve Chairman Jerome Powell underwhelmed markets by refraining from pushing back more forcefully against the recent spike in Treasury yields.
The S&P 500 briefly erased its 2021 gains, notching its lowest close in about five weeks.
Benchmark 10-year bond rates topped 1.5 percent and the dollar climbed. The Nasdaq 100 extended losses from a February peak to almost 10 percent, and the Russell 2000 of small caps slid 2.8 percent.
Powell said in an online event Thursday that he’d be “concerned” by disorderly markets, but stopped short of offering steps to curb heightened volatility.
The surge in Treasury yields has triggered fears about elevated stock valuations after a torrid equity rally from the depths of the pandemic.
While bulls have decided to view the jump in rates as a sign of economic strength that could lift corporate profits, there’s been mounting concern over a potential inflation pickup. For Bleakley Advisory Group’s Peter Boockvar, the Fed has put itself in a “tough situation.”
The U.S. Senate voted to take up a $1.9 trillion relief bill backed by President Joe Biden, setting off a debate expected to end this weekend with approval of the nation’s sixth stimulus since the pandemic-triggered lockdowns that began a year ago.