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The Dow falls 300 factors, giving up earlier positive factors as combating continues on Wall Avenue

Stocks fell Thursday, giving up strong gains from earlier in the session as Wall Street continues to struggle this year in an environment of rising interest rates.

The Nasdaq Composite ended the session down 1.3% at 14,154.02 after giving up a 2.1% gain from earlier in the day. The Nasdaq, home to many of the market's biggest tech names, closed more than 10% below a record set in November on Wednesday, signaling a technical correction.

The Dow Jones Industrial Average fell 313.26 points to 34,715.39 on Thursday after rising more than 400 points earlier in the day. The average of the 30 stocks closed below its 200-day moving average for the first time since December 2021. The S&P 500 fell 1.1% to 4,482.73 after rising 1.53% earlier. The S&P 500 closed below 4,500 for the first time since October 2021.

Small-cap benchmark Russell 2000 was down nearly 1.9% on Thursday.

Bespoke Investment Group highlighted the importance of hard selling by investors in the final hours of trading this year in a note to clients on Thursday.

"On average, US stocks rallied through midday, but late in the session there was also strong selling," the firm said. "Late day declines that are much worse than average in any given month do not typically result in underperformance going forward."

Peloton gained 23.9% after announcing it is temporarily halting production of its connected fitness products as consumer demand slacks, internal CNBC documents show.

Technology stocks like Zoom Video and Tesla led the markets higher for most of the day on Thursday. However, many lost strength towards the end of the session. Netflix closed down about 1.5% before posting its quarterly earnings after the market close.

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Equities fell as Treasury yields remained elevated, part of a market re-evaluation as the US Federal Reserve looks set to tighten monetary policy. The central bank meets next week with markets showing little chance of rate action. However, traders have fully priced in the first of an expected four 0.25 percentage point hikes through 2022.

The two-year Treasury bond, which is most closely linked to Fed interest rate policy, was last yielding around 1.04%, while the benchmark 10-year bond peaked at 1.87%.

"Investors need to be aware that 2022 is likely to be a much rougher ride," said LPL Financial's Ryan Detrick. "With rate hikes looming and the historically volatile half-year on the horizon, investors could be in for more violent ups and downs this year."

Multiple earnings reports moved shares on Thursday. Dow component Travelers posted higher and lower gains, while American Airlines also beat estimates but lowered guidance. Travelers rose 3.2% while American Airlines declined 3.2%.

United Airlines shares fell 3.4% after the company released its quarterly results and warned that omicron has hurt bookings and will delay recovery from the pandemic.

“The earnings season is early, but overall we're looking at another solid quarter for American companies. Yes, with rate hikes imminent, we are walking a delicate line and seeing some normal market volatility, but the fundamentals of the economy remain fairly solid,” added Detrick.

Thursday's unemployment data signaled that the rise in the Omicron could weigh on the recovery.

Jobless claims for the week ended January 15 totaled 286,000 for the week, the highest since October. The reading was well above the Dow Jones estimate of 225,000 and a significant gain from the previous week's 231,000.

“Rising jobless claims and falling existing home sales have caused 10-year bond yields to fall, which may reflect some reduction in the extent of Fed tightening – which will certainly fuel speculation of a 50 [basis point] rate hike in March dampening,” said Kathy Bostjancic, chief US economist at Oxford Economics. "Additionally, we face more volatile markets due to heightened uncertainty surrounding the economic, inflation and interest rate outlook."

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The S&P 500 is headed for its third consecutive week of losses. For the week, the Dow is down 3.3%. The S&P 500 is down about 3.9% since Monday. The Nasdaq is the biggest loser, losing nearly 5% this week.

Brad McMillan, chief investment officer at the Commonwealth Financial Network, acknowledged the turmoil could linger for some time but said investors shouldn't panic about rate hikes and that once the economy returns to normal they are normal.

"The economy and markets can and do adjust to changes in interest rates," McMillan said. “This environment is a normal part of the cycle that we see regularly. The current trend may be a little faster than we've seen, but it's a reaction to real economic factors – and therefore normal context."

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