US stocks held modest gains on Wednesday as 10-year US Treasury bond yields rose in afternoon trading.
The Dow Jones Industrial Average rose 80 points, or 0.2%, and the S&P 500 only rose 0.1%. The tech-heavy Nasdaq Composite gave up its early gains and lost 0.3%. On Tuesday, the Nasdaq Composite had its worst day since March amid a surge in bond yields.
The 10-year Treasury Treasury yield fell Wednesday morning trading near 1.5% but rebounded above 1.54% in afternoon trading. The yield hit a high of 1.567% on Tuesday, the current high for a week-long run that has put pressure on growth stocks.
Tech stocks, which were hit the hardest during Tuesday’s flight, rebounded on opening but slipped as the session progressed. Apple and Netflix held healthy profits, but semiconductor stocks weighed on the sector. Micron shares were down more than 2% after delivering a first quarter 2022 earnings and sales outlook that missed consensus estimates. Nvidia and Advanced Micro Devices also fell.
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Meanwhile, defensive stocks did well while the utilities sector outperformed. Additionally, aerospace giant Boeing rose more than 3% to become one of the top performers on the Dow. Energy stocks remained stable after outperforming earlier in the week.
“Higher bond yields after the more restrictive previous week [Fed], along with higher oil prices, a stabilization of high-frequency economic indicators, and evidence that the recent COVID surge in the US has peaked, has put pressure on the growth trade and strengthened value and small-cap trades – a shift in the leadership / rotation that has taken place so far is another hurdle for the S&P 500 given the index’s strong focus on secular growth, “said Lori Calvasina of RBC Capital Markets in a press release.” Our bottom line is that troubled conditions in US -Shares will last for a while. “
Shares in discounter Dollar Tree rose 16%, making it a top performer in the S&P 500 after the company announced it would increase its share buybacks and experiment with higher prices in some locations.
The problems for chipmakers and retailer price increases arise amid growing supply chain concerns that have been experiencing ongoing disruption from the Covid-19 pandemic.
Fed chief Jerome Powell said at a European Central Bank event on Wednesday that it was “frustrating to see that bottlenecks and supply chain problems are not improving, in fact margins appear to be getting a little worse. We see that this is likely to continue into next year ”. and stop inflation longer than we thought. “
The Washington debt ceiling debate has also weighed on stocks. Treasury Secretary Janet Yellen told House Speaker Nancy Pelosi that Congress had until October 18 to raise or suspend the debt ceiling and that it would have serious economic consequences. Jamie Dimon, CEO of JPMorgan Chase, said the bank was preparing for the possibility of the US hitting the debt limit.
Meanwhile, Senate majority leader Chuck Schumer is pushing for his chamber to vote Wednesday on a bill that would extend government funding through early December.
In terms of economic data, pending home sales rose 8.1% in August, according to the National Association of Realtors, well above the 1.2% expected by economists polled by Dow Jones.
On Tuesday, the Nasdaq Composite fell 2.83% to 14,546.68 for its worst day since March. The S&P 500 lost 2.04% and the Dow Jones Industrial Average lost 569.38 points, or 1.63%.
The Dow and S&P fell 2.6% and 3.5% respectively in September. The Nasdaq is down more than 4.5%.