Tech stocks plummet as Yellen says interest rates may need to rise

A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2020.

US stocks dropped sharply on Tuesday after Treasury Secretary Janet Yellen said interest rates may need to rise modestly to prevent the economy from overheating. Tech stocks led losses with shares of Apple,Tesla, and Amazon sinking into the close.

The Treasury Secretary’s comments contrast with the Fed’s plans to hold rates near zero through 2023, a policy that’s been positive for high-growth technology companies. Her comments come as investors worry that massive fiscal spending could lead to a spike in inflation.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” the former Fed chair said during The Atlantic’s Future Economy Summit on Tuesday.

Here’s where US indexes stood at the 4 p.m. ET close on Tuesday

Earlier on Tuesday, RBC raised its 2021 S&P 500 price target by 5% to 4,325, representing potential upside of about 4% from current levels. The firm said the current easy monetary policies of the Federal Reserve should continue to support stocks into year-end.

Jamie Dimon sat down with The Wall Street Journal’s editor-in-chief Matt Murray at the CEO Council Summit on Tuesday. The JPMorgan CEO said he doesn’t support bitcoin, criticized regulation of small businesses, and talked up the US economy in a new interview. Here are the 8 best quotes.

Ether jumped to a record high above $3,500 on Tuesday. The world’s second largest cryptocurrency is bigger than all but 12 publicly traded companies.

West Texas Intermediate crude jumped 1.8%, to $65.69 per barrel. Brent crude, oil’s international benchmark, rose 1.9%, to $68.85 per barrel, at intraday lows.

Gold fell 0.8%, to $1,776.50 per ounce.

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