Wall Street saw a significant decline in stocks on Thursday, driven by rising yields on US government bonds, a result of a Treasury auction that failed to meet investor expectations and a hawkish-toned speech on inflation by Jerome Powell, the Federal Reserve (Fed) chair. The market downturn came after the S&P 500 (^GSPC) had posted eight consecutive days of gains, marking its longest such streak in the past two years.
The S&P 500 fell by 0.8 percent following a day of gains, experiencing a sharp contrast to its recent winning streak. The Dow Jones Industrial Average (^DJI) also dipped by approximately 0.6 percent, and the Nasdaq Composite (^IXIC) wasn’t spared, with a 0.9 percent decrease.
The downturn was largely attributed to the Treasury auction held at 1 p.m. ET, where yields spiked. The 10-year Treasury yield (^TNX) surged to 4.62 percent, an increase of 10 basis points, while the 30-year Treasury yield (^TYX) reached 4.8 percent, rising by 15 basis points. This surge in yields had a cascading effect on the stock market.
Throughout the day, major companies unveiled their financial results for the previous quarter, resulting in mixed reactions from investors. Disney (DIS) witnessed a surge in its stock prices, driven by better-than-expected quarterly results and a tentative deal reached between a Hollywood studio and striking actors. The entire media sector experienced a boost as a result.
In contrast, Arm (ARM), a recently listed company, faced a decline in its stock value. The market responded negatively to its first results since going public, coupled with the revelation of a $6.2 billion loss by its SoftBank backer.
Turning to commodities, oil rebounded after earlier losses that had raised concerns about global consumption. West Texas Intermediate crude futures (CL=F) and Brent crude futures (BZ=F) both increased by approximately 0.3 percent, trading at around $75 per barrel and nearly $80 a barrel, respectively.
By the close of the trading day, all major Wall Street stocks had registered losses. However, market attention now shifts to several upcoming corporate reports as the earnings season nears its end. Investors will be closely watching for any potential catalysts that could influence the market’s direction in the coming weeks.
The surge in Treasury yields, coupled with a lackluster auction and the Fed chair’s firm stance on inflation, has amplified apprehension on Wall Street. Many are now reevaluating their strategies as they navigate these turbulent market conditions. Market analysts and experts suggest that careful consideration and caution are essential in the current economic climate.
Source: Yahoo Finance
