Stocks Drop to More Than One Week Low; Yields Rise: Markets Wrap
(Bloomberg) -- U.S. stocks dropped to the lowest levels in more than a week and Treasury yields edged higher amid growing concern rising borrowing costs could sap a rally that’s driven equity values to historic highs.
The tech-heavy Nasdaq 100 slumped 0.4%, the third consecutive decline. The energy and communication services sectors weighed on the S&P 500, which posted its biggest drop since Jan. 29. A report earlier showed initial jobless claims rose more than expected. Walmart Inc. fell 6.5% after saying it will increase spending on worker salaries and automation.
“This rise in rates will certainly test the mettle and staying power of the bulls,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Yields on 10-year Treasuries climbed as high as 1.32% before paring the increase. Yields reached the highest levels in a year earlier this week. Technology companies such as Tesla Inc., which have seen their valuations surge, are often seen as the most at risk of a pullback.
“The market is starting to get a little wary of this ‘bad news is good news’ scenario,” said Matt Benkendorf, chief investment officer of Vontobel Quality Growth. “Now you’ve seen a bit of a mixed picture, which scrambles the monetary policy visibility.”
In currency markets, the pound touched the strongest level versus the euro since March amid continued optimism over the nation’s vaccine rollout. The dollar weakened against Group of 10 peers. Bitcoin retreated, paring its weekly gain to 5%.
Commodities were broadly higher, with lumber futures climbed to a record $1,004.90 per 1,000 board feet. Copper in London hit a fresh 8-year high as China’s traders returned from holiday with metals markets in a bullish mood.
Meanwhile, the global oil market is grappling with a crisis caused by freezing temperatures in the U.S. More than 4 million barrels a day of output -- almost 40% of the nation’s crude production -- is now offline, according to traders and executives.
Stocks in Asia dropped overnight, with the Hang Seng Index down 1.6% and Japan’s Topix index 1% lower.
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