• U.S. stocks continued their decline, with the Nasdaq Composite falling 1.00% in the latest session.
  • The selloff was broad-based, with technology and growth stocks leading the losses amid rising concerns over interest rates.
  • Analysts point to a lack of near-term catalysts and persistent inflation fears as key drivers.

Market Selloff Deepens

U.S. equities extended their slide Thursday, with the Nasdaq dropping 1.00% as investors grappled with a deteriorating risk appetite. The S&P 500 fell 0.7%, while the Dow Jones Industrial Average shed 0.3%. The declines marked the third consecutive day of losses for major indices.

“It’s a risk-off day,” said a senior trader at a New York-based hedge fund, speaking on condition of anonymity. “The narrative has shifted from ‘higher for longer’ rates to ‘when will the pain end?’”

Tech and Growth Stocks Hit Hardest

The technology sector bore the brunt of the selling, with the Philadelphia Semiconductor Index sliding 2.5%. Megacap names like Apple Inc. and Microsoft Corp. each fell more than 1.5%, while Nvidia Corp. dropped 3%. Growth stocks, which are particularly sensitive to higher discount rates, also underperformed.

The rout was exacerbated by a jump in Treasury yields, with the 10-year note climbing to 4.35%, its highest level since November 2023. The move higher in yields came as the market priced in a greater chance of a Federal Reserve rate hike later this year.

Macroeconomic Backdrop Weighs

Thursday’s losses came amid a backdrop of stubborn inflation and strong economic data. The latest consumer price index report, released earlier this week, showed core inflation accelerating to 4.2% year-over-year, well above the Fed’s 2% target. Additionally, initial jobless claims fell to a nine-month low, signaling a still-tight labor market.

“The economy is not cooperating with the Fed’s desire to cut rates,” said a fixed-income strategist at a major bank. “Until we see clear evidence of a slowdown, the pressure on equities will remain.”

Lack of Catalysts

Market participants noted that the recent selloff has been driven by a vacuum of positive catalysts. Earnings season has largely passed, and corporate guidance has been cautious. Geopolitical risks, including ongoing trade tensions between the U.S. and China, have added to the uncertainty.

“Investors are looking for a reason to buy, but they’re not finding one,” said an equity portfolio manager at a Boston-based asset manager. “Valuations are still elevated, and the macro environment is challenging.”

Outlook Remains Uncertain

Despite the recent downturn, some analysts argue that the selloff may be overdone. The Cboe Volatility Index, or VIX, rose to 22, still below levels seen in previous market stress episodes. “This could be a healthy correction in a broader bull market,” a chief market strategist at a Wall Street bank told clients in a note. “But timing a bottom is always difficult.”

For now, all eyes are on next week’s Federal Reserve meeting, where policymakers are expected to hold rates steady. Any hawkish surprises could deepen the losses.

*Correction: An earlier version of this article misstated the magnitude of the Dow's decline. It has been corrected to 0.3%.