US close: Stocks finish mostly lower as bond yields climb

dl wall street wall st new york city nyc ney york stock exchange nyse nasdaq dow jones industrial average djia trading us usa united states of america 2023120702241 — Sharecast graphic / Josh White

US stocks were mostly lower on Thursday with the S&P 500 and Nasdaq falling for the fifth straight day as another rise in bond yields dampened risk appetite

The S&P 500 slipped 0.22% while the Nasdaq dropped 0.52%. While the Dow had pared earlier gains by the close it still managed to finish in positive territory, up just 0.06%.

The yield on a 10-year US Treasury note was up 3.8 basis points at 4.631%, nearing the five-month high reached earlier in the week, following a forecast-beating set of inflation figures and hawkish comments from the Federal Reserve prompted investors to push back their projections for when interest rates would start to come down.

"Investor sentiment remained under pressure due to persistent inflation and a robust economy that shows little signs of cooling down despite elevated interest rates," said Stephen Innes, managing partner at SPI Asset Management.

According to analysts at Vanguard in an interview with Bloomberg, a move past 4.75% in the 10-year US bond yield could prompt traders to abandon their bets on a rally and result in a bond sell-off that could push yields to their highs of 2007 – back above the 5% mark.

Economic data comes in mixed

On the macro front, manufacturing sector conditions in the mid-Atlantic region improved unexpectedly in April, according to the Federal Reserve Bank of Philadelphia's factory sector index, which rose from 3.2 in March to 15.5 in April (consensus: 1.5). A key sub-index tracking new orders improved from 5.4 to 12.2, while that for shipments jumped from 11.4 to 19.1.

According to the Department of Labor, in seasonally adjusted terms, initial unemployment claims over the week to 12 April were unchanged from the previous seven-day stretch at 212,000. Economists had pencilled-in a small rise to 215,000.

Finally, existing home sales fell 4.3% in March to a seasonally-adjusted annualised rate of 4.19m, according to the National Association of Realtors, partially reversing from a 9.5% rise in February. "Home sales are stuck because interest rates have not made any major moves. More inventory is always welcomed in the current environment", said NAR chief economist Lawrence Yun.

Market movers

Tesla was down nearly 4% after analysts at Deutsche Bank cut the stock to 'hold' and highlighted concerns over its plans to focus on developing Robotaxis after delaying its Model 2. The electric carmaker was also in the news after a WARN notice revealed it was laying off 14% of its workers at two sites in Buffalo, following large-scale job cuts announced earlier in the week.

Shares in credit checking business Equifax traded 8% lower on the back of some disappointing second-quarter guidance. The company forecast earnings of $1.65 to $1.75 a share for the current quarter, well below the $1.87 expected by the market.

Alaska Air shares flew higher following some better-than-expected first-quarter numbers, and DR Horton traded higher after topping expectations with its latest figures.

Online selling platform eBay gained after Morgan Stanley lifted its rating on the stock from 'underweight' to 'overweight', while Zoom rose after Rosenblatt Securities upgraded the video conferencing company from 'neutral' to 'buy'.

Dow Jones - Risers

Unitedhealth Group Inc. (UNH) $493.18 2.96%
Travelers Company Inc. (TRV) $210.42 1.86%
Nike Inc. (NKE) $95.73 0.95%
Verizon Communications Inc. (VZ) $40.14 0.88%
Chevron Corp. (CVX) $157.62 0.75%
Coca-Cola Co. (KO) $58.91 0.68%
Johnson & Johnson (JNJ) $145.74 0.67%
Cisco Systems Inc. (CSCO) $48.11 0.67%
JP Morgan Chase & Co. (JPM) $181.25 0.65%
3M Co. (MMM) $91.48 0.57%