Bond Blowout Continues as Stock Market Slides
In a continuation of the recent volatility in the financial markets, stocks finished lower on Thursday, marking the third consecutive day of losses. The decline was mainly driven by rising bond yields, with all three major U.S. indexes ending the day in the red. The Nasdaq Composite index led the downward trend.
The surge in bond yields has been largely attributed to the strength of the U.S. economy and concerns over inflation remaining stubbornly high. The latest data from the Labor Department showed 239,000 initial jobless claims last week, slightly below economists’ expectations. Additionally, retail giant Walmart reported growth in sales for its latest quarter.
Yields on longer-dated government bonds climbed higher, with the ten-year Treasury yields reaching 4.307% at the close of trading, up from 4.258% the previous day. The 30-year yield also increased to 4.411%.
Amidst the market turmoil, Hawaiian Electric shares experienced a sharp decline due to ongoing legal and financial troubles stemming from the Maui wildfires. The utility company is reportedly in talks with restructuring specialists to address these issues.
In another blow to investors, CVS stock dropped after a major health insurer announced that it was dropping CVS’s Caremark pharmacy benefit manager. This news had a negative impact on a range of healthcare shares.
However, there was some positive news in the market, as pharmaceutical company Moderna emerged as the best performer in the S&P 500, with its shares up nearly 6%.
On the commodities front, gold continued its downward trajectory, falling for the ninth consecutive session. The precious metal dipped by 0.5% to settle at $1,884 per ounce, marking its longest losing streak since 2017 and a decline of approximately 3% during this period.
Across global markets, the sentiment was mostly negative, with shares of industrial and construction companies weighing down the Stoxx Europe 600 index. In Asia, Japan’s Nikkei 225 index fell by 0.4%. However, there was a glimmer of hope in China, as the Shanghai Composite added 0.4% after a four-day losing streak.
As investors grapple with increasing bond yields and market volatility, it remains to be seen how the stock market will fare in the coming days.