U.S Treasury Yields Rise to Three-Month High as Stocks Fall

U.S Treasury Yields Rise to Three-Month High as Stocks Fall

U. S stocks ended sharply lower Tuesday, with the technology sector bearing the brunt, as government bond yields climbed to a three-month high. The Dow Jones Industrial Average dropped 1.6% to 34,299.99, with the S&P 500 down 2% to 4,352.63 and the Nasdaq Composite sinking 2.8% to 14,546.68.

The 10-year US Treasury yield climbed 6 basis points to 1.54%, the highest intraday level since the last week of June. The Conference Board’s Consumer Confidence Index fell to 109.3 in September from 115.2 in August, with declines in both the present situation and expectations readings amid a rise in COVID-19 cases.

If economic conditions continue to evolve as expected, the Federal Reserve will begin to taper its asset purchases soon, but the accommodation from the continued smaller purchases will last through at least mid-2022, Fed Chair Jerome Powell told the Senate Banking Committee Tuesday.

The COVID-19 delta variant and continued concerns about caregiving have kept the labour force participation lower than was expected, but Powell said these factors “should diminish with progress on containing the virus.” If inflation doesn’t slow, the Fed “would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal,” he added.

West Texas Intermediate crude oil slipped 0.9% to $74.81 per barrel, just off the recent two-month high.

The Organization of Petroleum Exporting Countries said Tuesday it expects global oil demand to increase by 17.6 million barrels per day between 2020 and 2045, growing from 90.6 mb/d in 2020 to 108.2 in 2045. However, global oil demand is set to plateau during the second half of the outlook period, from about 2035 onwards, OPEC said.

Meanwhile, New Street Research downgraded Applied Materials (AMAT) to neutral from buy. Shares of the chip equipment supplier fell 7% the worst performance in the S&P 500.

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IHS Markit (INFO) reported higher fiscal third-quarter earnings that beat Wall Street estimates but lowered its 2021 revenue forecast to reflect an expected drop in joint venture revenue and less favourable foreign exchange rates. Shares fell 5%.

In the metals markets, gold fell 1.1% to $1,732.80 per troy ounce, silver was also down 1.1%, to $22.44 an ounce, and copper dropped 1% to $4.25 per pound.

U.S Treasury Yields Rise to Three-Month High as Stocks Fall