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Stocks End Lower After Choppy Session

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U.S. stocks fell Thursday in a choppy trading session, dragged down by investor worries about the impact the Federal Reserve would have on markets if it raises interest rates faster than once anticipated.

All three major U.S. indexes finished the session lower, erasing intraday gains. The S&P 500 edged down 4.53 points, or 0.1%, to 4696.05. The Nasdaq Composite declined by 19.31 points, or 0.1%, to 15080.86. The Dow Jones Industrial Average lost 170.64 points, or 0.5%, to 36236.47.

Markets have kicked off 2022 with choppy trading. Volatility accelerated Wednesday after minutes of the Fed’s most recent meeting showed officials eyeing a faster timetable for raising rates. That sent stocks tumbling, with the technology-heavy Nasdaq posting its biggest one-day percentage loss since February.

The choppiness continued on Thursday, with major U.S. indexes whipsawing between gains and losses for portions of the session before ultimately finishing lower. Both the S&P 500 and the Nasdaq closed down for a third consecutive day, with the Nasdaq losing 4.7% over the period.

The yield on the 10-year U.S. Treasury note rose for a fourth consecutive day, reflecting investors’ conviction that the fast-spreading Omicron variant won’t stop the Fed tightening monetary policy to tame inflation. The yield on the 10-year note climbed to 1.733%, its highest yield since March 31, up from 1.703% Wednesday.

Among the S&P 500’s 11 sectors, the energy and financials sectors emerged as leaders, rising 2.3% and about 1.6%, respectively.

Bank of America,

Wells Fargo and

Citigroup

each rose 2% or more, getting a boost from rising bond yields.

Small-cap stocks were also a bright spot. The Russell 2000 index, which measures the performance of such companies, rose 0.6%.

The choppiness plagued technology and growth stocks.

Tesla

lost $23.42, or 2.2%, to close at $1,064.70.

Netflix

fell by $14.23, or 2.5%, to end at $553.29.

Facebook

parent Meta Platforms gained $8.29, or 2.6%, to finish at $332.46.

Fund manager

Cathie Wood’s

flagship ARK Innovation exchange-traded fund lost 0.6% to close at its lowest level since September 2020. Meme stocks finished in mixed territory with

GameStop

rising $1.66, or 1.3%, to $131.03.

AMC Entertainment

lost 29 cents, or 1.3%, to end at $22.46. Stocks popular among individual investors are off to a rocky start this year.

“As you transition from maximum liquidity to policy that’s becoming less accommodative, you want less exposure to those more speculative areas of the market,” said

Keith Lerner,

co-chief investment officer at Truist Advisory Services. “One of our main theses for coming into this year is that we are positive yet realistic. On the positive side it’s that we still think markets have upside based on a solid economy and strong profits. But the realistic side is that…we expect more normal pullbacks.”

Investors are bracing for the possibility of a volatile spell for tech stocks, which have powered the market higher since the early-pandemic slump in 2020. Shares of companies such as

Apple

and

Microsoft

have benefited from low interest rates on top of blockbuster earnings helped by the shift to home working.

Investors are bracing for a volatile spell for tech stocks.



Photo:

justin lane/Shutterstock

Rates, however, look set to increase, potentially as soon as March. Although investors say stocks can continue to rise in a period of rising rates that reflect a growing economy, tech shares and momentum stocks such as Tesla are seen as vulnerable.

“We could be in for a rough ride,” said

Lars Skovgaard Andersen,

investment strategist at Danske Bank Wealth Management. Mr. Andersen expects the volatility to last at least until tech companies begin to report earnings later this month, which he said could encourage investors to buy those stocks back.

Mr. Andersen sees the selloff as a buying opportunity but intends to target the broad market and European banks that stand to benefit when rates rise, rather than U.S. tech.

Money managers say the catalyst for Wednesday’s selloff and the market’s continued volatility Thursday was the publication of minutes from the Fed’s December policy meeting. They showed officials believed rising inflation and a tight labor market could call for lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.”

Some officials also thought the Fed should start shrinking its $8.76 trillion portfolio of bonds and other assets relatively soon after beginning to raise rates, the minutes said. Investors pushed yields on government bonds higher. In turn, that hurt tech stocks whose future cash flows are worth less in today’s terms when a higher discount rate is applied.

Mr. Lerner, of Truist, is expecting further gains for financials and energy stocks as the economy and labor market continues to grow, he said. Among technology stocks, he currently has a tilt toward more quality names with larger market capitalizations and strong earnings.

“We think there are going to be sharp sector rotations throughout the year and timing those is going to be challenging,” he said. “Part of our strategy is going to be to have a barbell approach, looking at what are the best areas of the cyclical side and then we are pairing that with some tech on the growth side.” 

On the economic front, Labor Department data showed there were 207,000 initial jobless claims, a proxy for layoffs, last week. A tightening labor market is one factor behind the Fed’s pivot toward raising rates sooner than the central bank had previously signaled.

The Labor Department’s December jobs report will be issued Friday. Economists surveyed by The Wall Street Journal are expecting the U.S. to have added 422,000 jobs.

While the SEC hasn’t announced major actions against big crypto exchanges, the commission has threatened to sue companies offering crypto lending. WSJ’s Dion Rabouin explains why this one part of the crypto market has drawn such a strong reaction. Photo: Mark Lennihan/Associated Press

Commodity markets were mixed Thursday. Brent-crude futures, the benchmark in energy markets, rose 1.5% to $81.99 a barrel after violence erupted in Kazakhstan, a major oil producer. Precious metals, which typically fall when interest rates rise, lost ground, with front-month silver futures dropping 4.2% to $22.17 a troy ounce.

Global markets ended lower after taking signals from the selloff that hit U.S. markets on Wednesday. The Stoxx Europe 600 fell 1.3%. Japan’s Nikkei 225 lost 2.9% and China’s Shanghai Composite Index fell 0.3%.

Protests first triggered by rising fuel prices in Kazakhstan have turned violent, prompting a Russian-led military coalition to send troops to the oil-rich country. Video shows government buildings and streets in several cities being stormed by demonstrators. Photo: Mariya Gordeyeva/Reuters

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Joe Wallace at joe.wallace@wsj.com

Corrections & Amplifications
Facebook parent Meta Platforms was misspelled as Meta Platorms in an earlier version of this article. (Corrected on Jan. 6)

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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