US close: S&P 500 falls for fourth session as bond yields surge

US stocks fell for a fourth straight day on Friday as a surge in bond yields and nervousness surrounding the ongoing conflict in the Middle East dampened the mood on Wall Street.

The Dow finished 0.9% lower, the Nasdaq dropped 1.5% while the S&P 500 fell 1.3%. The S&P 500 has now lost 3.4% of its value over the past four days alone, completely wiping out past gains made throughout October.

"A hawkish Fed, surging US yields and the fear of an escalation in the Middle East have pushed global stock indices into negative territory for the week," said Axel Rudolph, analyst at IG. "An over 10% surge in the gold price in the past couple of weeks and rise in the price of oil to just below $90 for TWI is not helping inflationary pressures either."

In a speech on Thursday, Federal Reserve chair Jerome Powell didn't go as far as saying that another rate hike was on the cards, but said he didn't think monetary policy wasn't "too tight right now".

In prepared remarks, Powell said the recent easing of inflation was a positive sign, but economic indicators in September were "somewhat less encouraging" and that policymakers were "united in our commitment to bringing inflation down sustainably to 2%".

The yield on a 10-year US Treasury touched a high of 4.997% during the session, setting fresh highs since July 2007, before falling back to the 4.928% level by the close.

"Treasuries finally found support late this week as the 5% level on the 10-year note attracted demand. But the near-term rate outlook remains bearish as the economy enters the fourth quarter with more momentum than previously expected," said analyst John Canavan from Oxford Economics.

Stock movements

American Express shares finished 5% lower despite the credit card company smashing earnings forecasts and narrowly beating revenue estimates. However, market chatter was suggesting the fall was due to the company's 58% jump in provisions for credit losses year-on-year.

Also in the red was Schlumberger after the oilfield services group missed sales forecasts for the third quarter, despite an 11% jump year-on-year.

Solar stocks dropped sharply after SolarEdge cut its guidance across the board for the third quarter on the back of softening demand in Europe. Invesco Solar, Sunnova, Enphase and Sunrun also closed with losses.