Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) were trading lower on Thursday amid a broad market sell-off driven by growing concerns about the potential effects of rising interest rates in the United States.
As of 2:00 p.m. EST, NIO‘s American depositary receipts were down by about 8.5% from Wednesday’s closing price, while the S&P 500 index was trading about 2.5% lower.
NIO has already had a tough week, and it’s only Thursday. The company’s fourth-quarter loss of $0.16 per share, reported on Monday afternoon, was worse than Wall Street had expected given NIO‘s strong sales numbers.Apple-converted-space”>
While the automaker’s business generally seems to be on track, that earnings miss raised some questions among investors who were already a bit nervous about its sky-high valuation. NIO‘s rate of sales growth may also be moderating, another reason for concern.Apple-converted-space”>
Those concerns have intensified as the week has gone on, with NIO and other high-flying growth stocks continuing to sell off.
There are two new macroeconomic issues underlying investors’ recent bearishness. First, the $1.9 trillion COVID-19 relief package moving through the U.S. Congress has some onlookers worried about inflation, if only because that’s a lot of money to pour into the economy more or less all at once.
Second, and relatedly, the yield on the benchmark 10-year U.S. Treasury bond has been rising, and hit its highest level in over a year — 1.50% — on Thursday afternoon. While that’s still quite low by historical standards, rising interest rates generally lead investors to reduce their exposure to risk.Apple-converted-space”>
Taken all together, that’s why NIO stock is down Thursday.
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