Dow falls 561 points, tech stocks plunge as spiking bond yields rattle investor nerves

• Tech stocks led a plunge in US stocks as the 10-year Treasury yield spiked to its highest point in a year.
• Investors' inflation expectations picked up as better-than-expected jobless claims Thursday morning signaled strong economic growth ahead.
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Tech stocks led a plunge in US stocks as the 10-year Treasury yield spiked to its highest point in a year.

The 10-year yield hit a high above 1.6%, punching above 1.5% for the first time since February 21, 2020. The move came just a day after it pushed past 1.40%.

"Thursday's stock market declines are largely driven by the 10-year Treasury yield breaching the crucial 1.5% level. Higher Treasury yields call for lower stock market valuations. Rising bond yields make stocks look less attractive. If an investor can score a higher yield in the bond market, they may move money out of stocks and into bonds," said James McDonald, Hercules Investments CEO.

"In addition to making stocks look less attractive, rising bond yields are also a drag on businesses and the economy. Rising bond yields generally result in higher borrowing costs," he added.

Better-than-expected jobless claims Thursday morning played into the narrative that the US economy is on pace for strong economic growth this year, further fueling expectations for an increase in inflation.

Here's where US indexes stood after the 4:00 p.m. ET close on Thursday:

• S&P 500: 3,829.25, down 2.45%
• Dow Jones industrial average: 31,400.50 down 1.76% (561.36 points)
• Nasdaq composite: 13,119.43, down 3.52%

GameStop, AMC, BlackBerry, and Nokia climbed higher on Thursday as Reddit traders returned to their favorite nostalgia-trade stocks. The GameStop surge could be in part to blame for this week's stock market sell-off as hedge funds scramble to reduce leverage, according to Fundstrat's Tom Lee.

Best Buy stock slumped over 10% on Thursday, hurt by fourth-quarter revenue that fell short of Wall Street's target and the electronic retailer's outlook for a potential decline in same-store sales in the current quarter.

Shares of Tesla slipped as much as 4% on Thursday as a report said the EV maker will idle the Model 3 line at its Fremont, California factory for two weeks. Staff on the Model 3 line in Fremont were told production would be shut down until March 7 without an explanation, according to unnamed Bloomberg sources.

Bitcoin hovered around $49,000. Ark Invest founder Cathie Wood said she could see the cryptocurrency's market cap swelling into the trillions during a panel Thursday.

Oil prices were mixed. West Texas Intermediate crude rose 0.2%, to $63.34 per barrel. Brent crude, oil's international benchmark, fell by 0.31%, to $66.83 per barrel.

Gold fell around 1.5%, to $1,769.90 per ounce.