(Bloomberg) — A rout in some of the world’s biggest technology companies dragged down stocks, outweighing gains in firms that stand to benefit the most from an economic rebound.
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The S&P 500 fell after earlier climbing on bets that central banks can move toward tighter policies to fight inflation without derailing the economy. The Nasdaq 100 sank, led by losses in giants like Apple Inc. and Tesla Inc. Commodity, financial and industrial shares rose. European equities jumped as the region’s officials unveiled a gradual pullback of pandemic stimulus, while the pound gained as the Bank of England unexpectedly raised rates. Bitcoin slumped.
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Policy makers are weighing measures to fight price pressures while balancing risks to growth. The European Central Bank temporarily boosted regular monthly bond buying for half a year to smooth the exit from crisis stimulus. The announcement followed Wednesday’s decision by the Federal Reserve to accelerate the pace at which it tapers asset purchases, while projecting rate hikes through 2024.
“Bitcoin and big tech are getting punished today as investors reallocate some of their more profitable risky bets. The growth outlook still remains upbeat for next year,” with some traders rotating back into cyclicals, said Edward Moya, senior market analyst at Oanda.
“While we expect increased stock market volatility as the Federal Reserve embarks on normalizing policy, equity markets should end the year higher as the economy still remains strong, which should lead to continued earnings growth,” said Richard Saperstein, chief investment officer at Treasury Partners.
“I do think that central banks are being reactive, which is good. If inflation does start to moderate as these major central banks are still expecting, we may actually expect some turn in the policy direction in the later part of next year,” said Janet Mui, investment director at Brewin Dolphin.
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