Stocks on the New York Stock Exchange took a hit as traders shifted their focus to the rise in the 10-year Treasury yield. The Dow Jones Industrial Average saw a decline of 173 points, while the S&P 500 and Nasdaq Composite each fell by 0.6%. This dip comes as the 10-year Treasury yield crossed the 5% mark for the first time in 16 years, drawing investor attention away from stocks.
Despite relatively good news about inflation, the stock market is reacting to the rising yields. However, not all stocks suffered the same fate. SolarEdge shares plummeted by over 26% after the company lowered its third-quarter revenue guidance. On the other hand, Knight-Swift Transportation rallied nearly 11% after surpassing third-quarter estimates.
Regional financial stocks also faced a struggle, with the SPDR S&P Regional Banking ETF experiencing a decline of more than 3%. The overall market performance for the week paints a similar picture of uncertainty. The S&P 500 is down 1.3%, the Nasdaq is off 2.1%, and the Dow has lost 0.8%.
Federal Reserve Chair Jerome Powell added to the concerns, stating that inflation remains too high. He cautioned that lower economic growth may be necessary to bring inflation down. At the same time, market expectations suggest that the central bank will not raise rates at its November meeting.
These developments highlight the delicate balance between the stock market and the bond market. As the 10-year Treasury yield rises, investors seem to be shifting their priorities, possibly driven by concerns over the persistence of inflation. It remains to be seen how these factors will continue to affect the market in the coming weeks.
“Travel aficionado. Incurable bacon specialist. Tv evangelist. Wannabe internet enthusiast. Typical creator.”