U.S Treasury Hits 2-Year High, Rising Yields Soften Stocks
U.S Treasury: United States (U.S) stocks market dips at midday after government bond yields surged and financials led decliners as higher expenses undermined Goldman Sachs’ (GS) fourth-quarter results.
The 10-year US Treasury yield jumped 7.1 basis points to more than 1.84%, its highest intraday level in two years. Yields closed at 1.34% on Dec. 3, indicating the speed at which rates have moved in the past six weeks.
Higher benchmark yield rates tend to be a headwind for growth areas such as technology and consumer discretionary, which were among the worst performers in Tuesday afternoon trading.
The Dow Jones Industrial Average sank 1.4% to 35,420.26, and the S&P 500 dropped 1.4% to 4,596.72. The Nasdaq Composite slumped 1.7% to 14,646.50. The only sector in the green was energy, benefiting from a continuing rotation into value-oriented sectors.
Fed’s hawkish poise rumples the financial markets as investors rebalance portfolios ahead of the implementation of interest rate hikes in the United States in the year. Fed’s tightening is a move to curb rising inflation amidst an energy crunch.
Reacting, the United States dollar hit a six-day high following the jump in Treasury yields, while inflation fears were bolstered as oil prices rose to their highest since 2014 on possible supply disruptions after attacks in the Gulf increased a tight supply outlook.
Read: U.S Treasury Yields Touch 2-Year High
Elsewhere, Goldman Sachs’s earnings missed analysts’ estimates as the investment bank recorded higher operating expenses and lower revenue in its global markets business.
Operating expenses widened to $7.27 billion from $5.91 billion amid substantially higher compensation and benefits expenses.
Goldman fell 7.7% intraday, the steepest decline on the S&P 500 and Dow, with shares following JPMorgan Chase & Co. (JPM), which reported a surge in expenses and a revenue miss last week.
West Texas Intermediate crude oil advanced $1.25 to $85.07 a barrel, its highest intraday level in more than seven years. # U.S Treasury Hits 2-Year High, Rising Yields Soften Stocks
