Rising rates have been on the market’s mind for several sessions now, but it was on Thursday when fears really took a bite out of stocks. While the major indices came off their lows by the closing bell, each of the Big 3 still took a healthy step backward. The NASDAQ suffered through the steepest drop with a plunge of 1.81% to 7879.51. The FANGs got shellacked led by a 3.55% drop in Netflix (NFLX). The rest of them were down by more than 2%, except for Apple (AAPL, -1.76%). In addition to the general malaise caused by rising rates, this index also got hit by a news report claiming that Chinese microchips were found in equipment from the likes of Apple and Amazon. Both companies have denied the allegation. The Dow’s five-day winning streak, which also included two straight closing highs, came to an end as the index dropped 0.75% (or 200 points) to 26,627.48. At its worst though, it had plunged by about 350 points. The S&P was off 0.82% to 2901.61. Meanwhile, small caps were back under pressure after a one-day reprieve yesterday. The Russell 2000 was off 1.46% on Thursday to 1646.91. So what’s the problem? The economy’s just too hot! The market has been taking rising rates in stride for a while now, but a pair of very strong reports yesterday on ADP employment and ISM Services gave the market pause. A nice rally Wednesday afternoon was significantly curtailed by the end of that session. And today the 10-year broke above 3.2% for its highest reading in years. The market couldn't handle it. The most important piece of economic data hasn’t even been released yet. The Government Employment Situation report from the BLS comes out tomorrow. The healthy jobs picture has been one of the distinguishing characteristics of this bull run, so it will be really interesting to see how the market responds if we get another strong reading. "For now, we have only a couple of days into this “new” risk. To me the market is just looking for a reason to sell off ahead of the data tomorrow. We will have to wait and see what happens tomorrow before we speculate further," said Jeremy in Counterstrike, which was the only portfolio that bought today (see below). Today's Portfolio Highlights: Counterstrike: Profits are an investor’s best friend, so Jeremy is looking for a worthwhile relationship with Signet Jewelers (SIG). After two bad years that saw its price slump below $40, the company looks to have reestablished momentum. It has reported five straight quarters of positive surprises, including a couple triple-digit beats in the past two. A recent pullback gave the editor a great opportunity to buy a 5% allocation in SIG on expectations that it can get back to $75. The portfolio is taking a smaller position now and would look to add more if the pullback continues a bit longer. Read the complete commentary for more on this new addition. Income Investor: "The jobs report comes out tomorrow morning, and that will be our top event for the next few trading periods. The big question for the report will be wage data, as another strong uptick in pay could lift bond yields again tomorrow. "Higher wages are a good thing for most Americans, but Wall Street views such a trend as inflationary. We should recall that this exact conversation is what inspired the massive February selloff earlier this year. "In August, wages increased 2.9%. It would not surprise me if anything at or above 3% caused talks of inflation to return with a vengeance tomorrow." -- Ryan McQueeney Insider Trader: "Stocks were hitting new highs going into this sudden rise in the rates. They've been hitting new highs for the past 2 years. Many people have big profits in the FAANGS and other hot technology names. "Why not cash some of it in and move to the sidelines? "Pullbacks are normal. There was some speculation building in some stocks like Square, which soared for no reason late last week, and the pot stocks which have been in a mania. "Corrections are needed to push back on the craziness." -- Tracey Ryniec Have a Good Evening, Jim GiaquintoRecommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >> Zacks Investment Research