Wall Street's main indexes slipped on Thursday as a deepening bond selloff pushed Treasury yields to their highest level since 2002, outweighing gains in software stocks tied to AI optimism. The Dow fell 231.69 points, the S&P 500 lost 15.85 points and the Nasdaq Composite dropped 18.52 points.
Rising Treasury yields outweighed enthusiasm for software stocks on Thursday, dragging Wall Street's main indexes lower. The Dow Jones Industrial Average fell 231.69 points, or 0.46%, to 50,674.36, while the S&P 500 lost 15.85 points, or 0.22%, to 7,635.69 and the Nasdaq Composite dropped 18.52 points, or 0.07%, to 26,842.55.
Treasury yields hit a multi-decade high
A deepening global bond selloff pushed the yield on the benchmark 10-year Treasury note to 5.3445%, its highest since 2002, a day after Treasuries logged their worst quarter since 1994. According to Reuters: "When a safe government bond pays more than 5%, stocks have to earn their keep", said Brian Jacobsen, chief economist at Annex Wealth Management.
Rate-sensitive stocks bore the brunt of the move, with housing down 1.4% and banks shedding 2.2%. Real estate, utilities and consumer staples sector indexes were also in the red, and the Cboe VIX index climbed to a two-week high, last at 17.23 points.
Software gains offer a counterweight
Software shares rallied, however, on results from Accenture, which climbed 22% after the consulting firm forecast full-year revenue growth above estimates. Rival Cognizant climbed 10%, while blue-chip IBM gained 4.2%, and the S&P 500 software index firmed 1.7% to its highest since November, outperforming the broader tech index's 0.3% advance.
Micron Technology's better-than-expected revenue forecast and $32 billion customer commitments under its supply agreements reinforced faith in the AI trade, though its shares slipped about 0.9% after nearly quadrupling this year.
Rate outlook and market breadth
Softer-than-expected inflation data bolstered expectations that the Federal Reserve would hold rates steady in October, with traders pricing in a 63% chance of a pause, while a December hike remained possible as inflation stayed above the Fed's 2% target. Weekly jobless claims pointed to continued labor market resilience, with unemployment benefit applications falling and layoffs easing in September.
Declining issues outnumbered advancers by a 2.48-to-1 ratio on the NYSE and by 1.86-to-1 on the Nasdaq. The S&P 500 posted three new 52-week highs and 35 new lows, while the Nasdaq Composite recorded 17 new highs and 171 new lows.
Source: Investing.com
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