Wall Street falls after 10-year yield climbs to the cusp of 5%
NEW YORK (AP) – Wall Street fell Thursday as it faces the prospect of a 5% yield on the 10-year Treasury for the first time since 2007.
The S&P 500 lost 36.60 points, or 0.8%, to 4,278.00 following a mixed set of profit reports from Tesla and other influential companies The Dow Jones Industrial Average dropped 250.91, or 0.7%, to 33,414.17, and the Nasdaq composite sank 128.13, or 1%, to 13,186.18.
Stocks felt pressure from the bond market, where rapidly rising yields have been squeezing Wall Street since the summer. The yield on the 10-year Treasury touched 4.99%, up from 4.91% late Wednesday, before paring its gain to 4.98%. As the reference point for much of the financial world, the 10-year yield helps set prices for all kinds of investments and loans.
Another report came Thursday to show the U.S. job market remains remarkably solid despite the much-higher rates. Fewer U.S. workers applied for sales of previously occupied homes fell last month, though not by as much as economists expected.
Vamvakidis wrote in a BofA Global Research report that he sees risks of yields and the dollar remaining high after the landing, even if they’re both lower than current levels.
High yields hurt all kinds of stocks, but they hit particularly hard on those bid up on expectations for big growth far in the future and those seen as very expensive. That’s often put the spotlight on Big Tech recently, and some reported a mixed set of profits.
Netflix, which jumped 16.1%. It reported stronger profit for the latest quarter than analysts expected, and it said it would raise prices on some of its membership levels to drive more revenue.
United Airlines warned that high fuel prices and the suspension of flights to Tel Aviv would eat sharply into its profits at the end of the year.
Overall, analysts expect companies across the S&P 500 index to report war in the Middle East could lead to disruptions of supplies.
In stock markets abroad, indexes fell across Europe after slumping more sharply across Asia.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.