Stock Market Today: Tech Trounced as Fed Elation Fades

Semiconductor stocks and other technology-sector shares took a nosedive Thursday to lead the major indexes lower.

A keyboard has been thrown through a monitor
(Image credit: Getty Images)

A day after rallying on the Federal Reserve's latest policy announcements, the stock market took a rapid 180, with technology stocks (-2.8%) in particular falling off a cliff.

Giving the sector a bit of a shove Thursday was Europe, where both England and Norway's central banks raised their benchmark interest rates – by 15 basis points to 0.25%, and by 25 basis points to 0.5%, respectively. (A basis point is one one-hundredth of a percentage point.)

That provided a spark for at least some of the selling in technology, which also has been trading at extremely lofty levels of late. At nearly 27 times forward earnings estimates, tech is the second most expensive sector and far frothier than the S&P 500's 20.5 ratio.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%
https://cdn.mos.cms.futurecdn.net/flexiimages/xrd7fjmf8g1657008683.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of Kiplinger’s expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of Kiplinger’s expert advice - straight to your e-mail.

Sign up

Mega-cap names Apple (AAPL (opens in new tab), -3.9%) and Microsoft (MSFT (opens in new tab), -2.9%) accounted for significant chunks of losses in the major indexes. Chip stocks were brutalized, too.

"Reports that Apple is potentially taking wireless chip production in-house is adding to the weakness in multiple [semiconductor] components," says Michael Reinking, senior market strategist for the New York Stock Exchange. Skyworks Solutions (SWKS (opens in new tab), -8.5%) and Xilinx (XLNX (opens in new tab), -8.2%) were among the weakest performers in the semiconductor industry.

Sign up for Kiplinger's FREE Investing Weekly e-letter for stock, ETF and mutual fund recommendations, and other investing advice.

That led to deep pain for the Nasdaq Composite, which retreated 2.5% to 15,180. The S&P 500 lost 0.9% to 4,668, and strength in cyclical sectors limited the Dow Jones Industrial Average to a marginal decline to 35,897.

stock chart for 121621

(Image credit: YCharts)

Other news in the stock market today:

  • The small-cap Russell 2000 sank 2.0% to 2,152.
  • U.S. crude oil futures managed a 2.1% gain against the grain, settling at $72.38 per barrel.
  • Gold futures gained 1.3% to $1,788.10 after the U.S. dollar shrank back.
  • Some of the air came out of Bitcoin, too, with the cryptocurrency declining 2.7% to $47,913.61. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)

Look to Real Estate for Stability in 2022

The traditional wisdom goes that rate hikes can adversely affect dividend-yielding stocks. After all, the thinking goes: If you can get comparable income from bonds, which are typically less risky than equities, why wouldn't you opt for the relative safety of debt?

Real estate investment trusts (REITs), however, typically act as the exception, not the rule, with S&P Global noting that during the majority of periods of significantly rising rates, REITs have either matched or beaten the S&P 500.

And there are other reasons to believe that 2022 could be a good year for REITs.

"As commercial activity and day-to-day life normalize, demand for commercial and residential real estate space will continue to recover," says State Street Global Advisors. "Combined with higher rent inflation in 2022, this supports REIT dividend growth and potential valuation appreciation."

In our latest look-ahead for investors positioning themselves for 2022 (opens in new tab), we explore the real estate sector. Read on as we analyze 12 of the best REITs for 2022 – picks that offer a mixture of below-average valuations, above-average yields and some growth potential.

Kyle Woodley
Senior Investing Editor, Kiplinger.com

Kyle is senior investing editor for Kiplinger.com. As a writer and columnist, he also specializes in exchange-traded funds. He joined Kiplinger in September 2017 after spending six years at InvestorPlace.com, where he managed the editorial staff. His work has appeared in several outlets, including U.S. News & World Report and MSN Money, he has appeared as a guest on Fox Business Network and Money Radio, and he has been quoted in MarketWatch, Vice and Univision, among other outlets. He is a proud graduate of The Ohio State University, where he earned a BA in journalism.