News: U.S. yields scale new heights, tech drop pressures Wall Street.
NEW YORK / LONDON (Reuters) – US Treasury benchmark yields hit 14-month highs on Thursday, putting new pressure on technology stocks as markets move a few steps from their initial response to the Federal Reserve’s policy statement a day earlier undone.
The tech-heavy Nasdaq fell over 1% in morning trading, while MSCI’s global stock index rose 0.01%, supported by European stocks as the pan-European STOXX 600 index rose 0.45%.
The dollar rebounded, putting pressure on oil prices and reversing an initial decline after the Fed’s meeting on Wednesday when the Fed said the US economy was well on its way to its strongest growth in nearly 40 years since it did recovering from the COVID-19 crisis.
Investors said markets continued to react to the Fed meeting and Chairman Jerome Powell’s press conference when the central bank pledged to keep going despite an expected rise in inflation.
“It’s all about the Federal Reserve meeting that drives markets today,” said Brad Peterson, regional portfolio advisor for Northern Trust Wealth Management.
“While they reassured people that they will be in no rush to raise short interest rates, their convenience in securing interest rates at the long end of the curve comes as a bit of a surprise to people.”
On Wall Street, the Dow Jones Industrial Average rose 171.76 points, or 0.52%, to 33,187.13, the S&P 500 lost 13.8 points, or 0.35%, to 3,960.32, and the Nasdaq Composite fell 181.76 points or 1.34% to 13,343.44.
The S&P 500 tech sector slumped more than 1%, while financials sensitive to bond yields were the best performing group.
The yield on the 10-year US Treasury bill rose to 1.754%, its highest level since January 2020, causing bond yields to surge around the world.
The 10-year benchmark debt was last down 25/32, returning 1.7277% from 1.641% late Wednesday.
“I don’t know what the Fed can do to stop a surge in yields based on stronger fundamentals,” said Rob Robis, chief global fixed income strategist at BCA, referring to the US coronavirus bailout in the amount of $ 1.9 trillion that will drive growth.
“The path of least resistance still leads to higher returns,” he said. “The US treasury market leads the world and every bond market is responsive.”
Chart: Rising US Treasury Yields –
Data showed that the number of Americans making new jobless claims rose unexpectedly last week, but the labor market is regaining traction as an acceleration in vaccination pace leads to more businesses reopening.
The US dollar rebounded across the board as higher government bond yields helped offset losses from the previous session.
The dollar index rose 0.474% and the euro 0.53% to $ 1.1914.
Oil prices fell for a fifth day due to a stronger dollar, further spikes in US crude oil and fuel supplies, and the weight of the ubiquitous COVID-19 pandemic.
US crude recently fell 4.02% to $ 62.00 a barrel and Brent was at $ 65.44, down 3.76% on the day.
Additional coverage from Ritvik Carvalho in London; Adaptation by Larry King, Jonathan Oatis and Dan Grebler
Original Source © Reuters