Wall Street witnessed a turbulent end to the week as US stocks grappled with soaring benchmark 10-year Treasury yields, reaching levels not seen in years. On Friday, prices tumbled for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite, culminating in weekly losses for all three major indexes.
This downturn followed Federal Reserve Chairman Jerome Powell’s resolute affirmation of the bank’s commitment to a “higher for longer” rates policy. Powell’s remarks prompted a surge in Treasury yields, propelling the pivotal 10-year rate to an attention-grabbing 5%, a threshold last observed in July 2007.
According to DoubleLine portfolio manager Greg Whiteley, “The underlying message is ‘don’t be looking for a bailout from the Fed anytime soon,’” as stated in a Reuters report. He noted that this sentiment could embolden investors to push rates beyond the 5% mark.
Despite hopes pinned on forthcoming earnings reports to lift the prevailing somber sentiment, stock prices remained lackluster throughout the day. The looming specter of an escalation in the Israel-Hamas conflict only further unsettled already anxious markets.
At the close of Friday’s trading session, the Dow Jones Industrial Average registered a 0.9% dip, shedding 270 points, while the S&P 500 experienced a 1.3% decline. Simultaneously, the tech-heavy Nasdaq Composite witnessed a 1.5% drop. In a counterbalance, the benchmark 10-year yield retraced slightly, settling at 4.91%, contributing to a broader rebound in fixed-income assets.
While there was some retracement of earlier losses by day’s end, the potential for further strain in the bond market, colloquially referred to as the “pain trade,” coupled with persistent geopolitical tensions, casts a shadow of uncertainty over the future trajectory of US stocks.
As the week concludes, the interplay between surging Treasury yields and the resilience of US stocks sets the stage for a dynamic and uncertain market landscape in the days ahead.Investors remain on edge as they navigate this precarious economic landscape.
Source: Yahoo Finance
