Stock market hit by huge selloff as bond yields rise

by Jonathan Adams
bond yields rise

The fall in share price has been driven by high bond yields, which have caused expensive stocks to fall in value

Investors have rushed to sell off technology stocks which have caused a drop in the US stock exchange. Due to the sell-off in stocks, the Dow Jones has fallen by 434 points (1.2 percent). The Nasdaq Stock Market, the second-ranked US exchange, fell by 2.29 percent in trading.

The fall in share price has been driven by high bond yields, which have caused expensive stocks to fall in value.

As reported by Bloomberg, the rush to sell off technology stocks has seen a $1.5trillion (£1.1billion) run.

In the first week of this year, some of the most expensive stocks have fallen by 10 percent.

Morgan Stanley’s Michael J. Wilson said in a note to clients that he expects valuations to continue to fall.

He said: We’ve never seen stocks this expensive for the overall market, which means valuations are likely to come down more before we’re through with this correction.

Due to the quick sell-off in stocks, the Cboe Volatility Index has risen rapidly since last Friday. The index measures volatility expectations over the next 30 days.

On Friday, the index had stood at 18.95 but has now surged by 19.3 percent today to 22.38.

In December, inflation also rose to five percent in the eurozone.

The Bank of England is currently tracking inflation at 5.1 percent as of last December.

Experts are also expecting the UK’s GDP to drop in December and January when figures are released.

Andrew Goodwin, chief UK economist at Oxford Economics said: The damage to the services sector from the resurgence in Covid means it’s likely that GDP fell in December and will struggle to grow much in early 2022, creating a weak starting point for expansion this year.

There are also fears over future growth in the country due to wage stagnation and rising living costs.



Important
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Related News

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Know more