The 10-year Treasury yield spike sparked broader worries about the health of the economy, which led to a decline in stocks on Friday.
In its first losing week in three, the S&P 500 dropped 1.26% to 4,224.16. In order to reach 12,983.81, the Nasdaq Composite fell by 1.53%. Due to American Express’ decline during the day and a mixed earnings report, the Dow Jones Industrial Average dropped 286.89 points, or 0.86%, to close at 33,127.28.
On Thursday, the yield on the benchmark 10-year Treasury crossed the 5% threshold for the first time in 16 years. This level might have a negative impact on the economy by rising interest rates for a variety of loans, including those for homes, credit cards, and cars. In addition, it gives investors a desirable substitute for equities.
For the first time since July 2007, the 10-year yield traded over that mark as it reached 5.001% about 5 p.m. ET on Thursday. Through Friday, it retreated from that point.
According to David Donabedian, chief investment officer of CIBC Private Wealth Management, “the stock market is watching the bond market and doesn’t like what it sees.” Even with the generally positive news about inflation, yields are increasing. This is the main cause of the stock market’s weakness.
Source (CNBC)
