US open: Mixed start to trading as bond yields surge
Wall Street stocks were mixed early on Thursday as the 10-year Treasury yield soared to a 14-month high and fuelled another tech sell-off.
As of 1525 GMT, the Dow Jones Industrial Average was up 0.42% at 33,153.22, while the S&P 500 was 0.38% weaker at 3,959.02 and the Nasdaq Composite started out the session 1.33% lower at 13,345.33.
The Dow opened 137.85 points higher on Thursday, extending gains recorded in the previous session after the Federal Reserve upped its economic forecasts following its two-day meeting.
Stocks were under pressure at the open after the yield on the 10-year Treasury note shot above 1.7% despite reassurance from the Fed that it had no intentions of hiking interest rates anytime soon or tapering its bond-buying program. The 30-year note also traded above 2.5% for the first time since August 2019.
Fed head Jerome Powell stated the central bank wanted to see inflation sit consistently above its 2% target and also witness material improvement in the US labour market before even considering making changes to rates or monthly bond purchases.
The Federal Reserve also upped its economic outlook in order to better reflect expectations for a strong recovery, with Powell now anticipating gross domestic product growth of 6.5% in 2021 rather than initial projections for a reading of 4.2%, but also said it would need to witness a material and sustained advance in prices and a steep drop in unemployment before discussing making changes to its current easy policy stance.
Also in focus on Thursday, initial US jobless claims jumped unexpectedly in the week ended 13 March, while secondary claims were roughly flat. According to the Department of Labor, the number of Americans filing for unemployment claims for the first time increased by 45,000 to reach 770,000 - ahead of expectations for a reading of 695,000.
Elsewhere on the macro front, a closely-followed survey of manufacturing sector conditions in the US mid-Atlantic region surprised sharply to the upside, with the Federal Reserve Bank of Philadelphia's factory index jumping from a reading of 23.1 for February to 51.8 in March - far higher than 24.0 print that economists had pencilled-in.
Lastly, the Conference Board's leading index increased 0.2% in February to 110.5, following a 0.5% increase in January and a 0.4% jump in December, suggesting economic growth should continue well into 2021.
In the corporate space, tech stocks like Apple, Alphabet, Microsoft, Tesla and Facebook all traded lower as elevated bond yields sparked yet another sector-wide sell-off.