Stocks started Wednesday higher but retreated as the session wore on as a surprise rate hike from the Bank of Canada lifted expectations the Federal Reserve will hike interest rates at its upcoming meeting.
Not helping matters was a spike in Treasury yields, which had an outsized effect on tech stocks.
"The Bank of Canada is a leading central bank," says Edward Moya, senior market strategist at currency data provider OANDA, adding that they were the first among their global peers to raise interest rates in 2022 and the first to pause earlier this year.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Canada's central bank restarting its tightening cycle and signaling more rate hikes could come down the pike in order to tamp down stubbornly high inflation has many rethinking what the Fed will do, Moya says.
At last check, futures traders were pricing in a 31% chance for a quarter-point rate hike at the next Fed meeting, up from 22% yesterday and 26% one week ago. But even if the Fed pauses at its upcoming gathering, the probability for a 0.25% rate increase at the July meeting is over 50%, according to CME Group.
Treasury yields spike
Increasing expectations for higher interest rates lifted Treasury yields on both 2-year (+2.5 basis points to 4.55%) and 10-year (+9.3 basis points to 3.793%) notes. This, in turn, dragged on technology (-1.5%) and communication services stocks (-1.1%).
Not surprisingly, the tech-heavy Nasdaq Composite was the worst performer of the major indexes, shedding 1.3% to 13,104.
The S&P 500 (-0.4% at 4,267) also finished in the red, while the Dow Jones Industrial Average gained 0.3% to 33,665 on strength in industrial stock Caterpillar (CAT, +3.9%) and big bank Goldman Sachs Group (GS, +2.7%).
Nvidia a top stock pick of billionaire investors
Each quarter, we take a look at regulatory filings to see what the smart money is doing. We've uncovered the stocks Warren Buffett is buying and selling in the Berkshire Hathaway equity portfolio, as well as the best blue chip stocks that hedge funds bought in the first quarter.
Most recently, we took a deep dive to see what were some of the top stock picks of billionaire investors at the start of the year. Spoiler alert: they are some of the biggest and best tech stocks on Wall Street.
One particular standout was Nvidia (NVDA), which is a favorite of Philippe Laffont's Coatue Management. The hedge fund has owned NVDA since 2016 and upped its stake in the semiconductor stock by 7% in Q1, which followed a 37% increase in Q4. It's easy to see why the smart money is clamoring for a piece of Nvidia's pie. Not only has it more than doubled in value for the year-to-date, but it's been one of the best stocks of the past 30 years.
Related Content
-
Why More Americans Are Redefining Retirement, Just Like I DidRetirement readiness requires more than just money. You have a lot of decisions to make about what kind of life you want to live and how to make it happen.
-
2026 is Almost Here: Is Your Portfolio Ready for These Investing Changes?A possible stock market bubble. Trump accounts. Tokenized stocks. These are just three developments investors need to be aware of in the coming months.
-
Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market TodayNvidia became the first company ever to boast a $5 trillion market cap, but it wasn't enough to lift the Dow and the S&P 500.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
Dow Beats 334-Point Retreat on Tech Bite: Stock Market TodayInvestors, traders and speculators wonder whether this remains a Magnificent 7 market and how long this AI-driven bull run will last.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffett become people like Warren Buffett by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
Trade Uncertainty Sparks Whipsaw Session: Stock Market TodayVolatility is making a cameo here in mid-October, a generally positive month marked by its historic stock market events.
-
Stocks Swing in Volatile Session: Stock Market TodayThe main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Dow Adds 587 Points as Stocks Bounce: Stock Market TodayThe main indexes rebounded sharply Monday after President Trump took a calmer stance toward China.
