Nasdaq nears record as Fed rate hikes seen far out on horizon

Gold plunged below $1,800 an ounce

The Nasdaq Composite neared a record high Thursday as investors rotated into growth stocks after digesting the Federal Reserve’s plan to exit from the emergency measures put in place during the COVID-19 pandemic. 

The tech-heavy Nasdaq surged 0.87%, missing its record high by less than 13 points. The S&P 500 and the Dow Jones Industrial Average, meanwhile, fell 0.04% and 0.62%, respectively. 

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 34975.55 -168.76 -0.48%
SP500 S&P 500 4387.7 -34.60 -0.78%
I:COMP NASDAQ COMPOSITE INDEX 14566.858563 -273.85 -1.85%

The Federal Reserve on Wednesday held its benchmark interest rate near zero and maintained its bond-buying program at a pace of $120 billion per month, but moved up the forecast for the first rate hike to 2023 from 2024. More members, but not a majority, said the first rate hike could occur in 2022.  

FED'S POWELL USES LUMBER PRICES TO EXPLAIN INFLATION PATH

In stocks, growth names like Tesla Inc., Square Inc. and Facebook Inc. battled higher as investors took relief in the idea that interest-rate hikes were still likely over a year away.

So-called meme stocks including AMC Entertainment Holdings Inc. also gained. 

Ticker Security Last Change Change %
TSLA TESLA, INC. 636.11 -21.51 -3.27%
FB FACEBOOK, INC. 366.37 -6.09 -1.64%
SQ SQUARE, INC. 247.83 -14.21 -5.42%
AMC AMC ENTERTAINMENT HOLDINGS INC 38.46 -1.89 -4.68%

Elsewhere, Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. were lower as money rotated out of financials and into growth. Banks stand to benefit from rate hikes which would boost net interest margin, or the spread between interest income earned from their borrowers and the amount of interest paid out to their lenders. 

Ticker Security Last Change Change %
BAC BANK OF AMERICA CORP. 38.01 -0.15 -0.39%
JPM JPMORGAN CHASE & CO. 152.11 +0.52 +0.34%
C CITIGROUP, INC. 67.91 +0.16 +0.24%

In earnings, homebuilder Lennar Corp. beat on both the top and bottom lines as higher prices helped offset supply shortages. The company said it is grappling with higher costs for materials and a labor shortage.

Kroger Co. raised its annual profit forecast as upgrades to its online options provided a lift. Both earnings and revenue were ahead of expectations. It also announced plans to buy back $1 billion in stock. 

Ford Motor Co. announced second-quarter earnings "will surpass its expectations and be significantly better than a year ago"; CEO Jim Farley will provide further details to investors at a Deutsche Bank conference later Thursday. 

Ticker Security Last Change Change %
LEN LENNAR CORP. 102.38 +1.14 +1.13%
KR THE KROGER CO. 39.88 +0.07 +0.16%
F FORD MOTOR CO. 13.74 -0.26 -1.82%

Meanwhile, Lordstown Motors Corp. said on Thursday that it does not have any confirmed orders for its electric pickup truck. The clarification comes two days after President Rich Schmidt told attendees at an Automotive Press Association event that the company had received binding orders for the first two years of production. 

Ticker Security Last Change Change %
RIDE LORDSTOWN MOTORS 6.81 -0.48 -6.58%

Miners Newmont Corp. and Barrick Gold Corp. were under pressure as gold plunged $85.70 to $1,773.80 an ounce, its lowest since April 30. 

Ticker Security Last Change Change %
NEM NEWMONT CORP. 61.02 +0.64 +1.05%
GOLD BARRICK GOLD CORP. 20.875 +0.06 +0.26%

West Texas Intermediate crude oil slipped $1.11 to $71.04 a barrel. 

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Overseas markets were mostly weaker.

European bourses were mixed with Britain’s FTSE 100 falling 0.44% while France’s CAC 40 and Germany's DAX 30 ticked up 0.2% and 0.11%, respectively. 

In Asia, Japan’s Nikkei 225 lost 0.93%, China’s Shanghai Composite rose 0.21% and Hong Kong’s Hang Seng index advanced 0.43%.