Nasdaq, which includes stocks of tech giants such as Facebook, Apple, Amazon, Netflix and Google, closed down almost 5 percent on the week at 13,192. The last time Nasdaq fell more was during the week to October 25, when it lost 5.5 percent. Just a week ago, the tech-heavy index hit a record high of 14,175.
The S&P 500, a barometer for the top 500 US stocks, closed the week down 2.4 percent at 3,813. The Dow Jones Industrial Average, the broadest gauge of the New York Stock Exchange, fell 1.8 percent on the week at 30,932.
Nasdaq was the favorite target of sellers for one reason - it had run way ahead of the Dow and S&P 500. Despite the tech-heavy index rebounding 0.6 percent on Friday - while the Dow fell 1.5 percent on the day and S&P500 slid 0.5 percent - Nasdaq’s weekly loss persisted.
Nasdaq’s fall from grace came as the yield on US bonds’ benchmark 10-year note surged above the 1.6 percent this week, a level only seen previously in February 2020, before the outbreak of the coronavirus pandemic.
Bond yields spiked as weekly US jobless claims fell to November lows. The better employment scenario raised expectations that the economy may rebound faster than thought from the COVID-19 pandemic, triggering investor rotation out of long-profitable but pricey tech stocks and into undervalued companies that could benefit from a broader recovery.
“It's a bit of a wild end to the week,” Craig Erlam, markets strategist at New York-based brokerage OANDA, said. “We are heading for a super-charged recovery, after all, thanks to the vaccine rollout and all the fiscal support measures over the last 12 months.”
Despite the large weekly loss, Nasdaq maintains a 2.4 percent gain on the year. The S&P500 is up 1.5 percent year-to-date while the Dow has an annual gain of just 1.1 percent.