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As Inflation Numbers Fuel New Worries About Interest Rates, the Dow Closes More Than 150 Points Down

As traders fretted over fresh data suggesting continuing U.S. inflation, stocks declined on Thursday, under pressure from rising Treasury yields.

The Dow Jones Industrial Average dropped by 173.73 points, or 0.51%, to finish at 33,631.14 overall. The S&P 500 fell 0.62% and closed at 4,349.61. The tech-heavy Nasdaq Composite fell 0.63% to 13,574.22 and finished the day. The major indices ended a run of four straight gaining days.

On Thursday, new inflation statistics caused a spike in Treasury yields. The standard 10-year rate increased by about 11 basis points to 4.70%. After increasing by more than 6 basis points, the 2-year Treasury yield was trading at 5.06%.

A 16-year peak in yields recently shook equities. The 10-year Treasury yield climbed above 4.8% at the beginning of the month.

Some investors think higher yields are likely to stay, which may have contributed to Thursday’s decline in the share market.

“The underlying assumption that we would eventually reach 2% inflation is undermined by every [CPI] report that comes in when it shows more stickiness. The bond market still wants to think we will achieve or come close to 2% inflation, but we won’t, according to Phillip Colmar, managing partner and global strategist at MRB Partners. The market “realises that yields will move higher,” he added, adding that stocks are still declining.

Source (CNBC)

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