US Stocks Fall as Treasury Yields Retreat
During afternoon trading on Friday, US stocks experienced a decline after benchmark Treasury yields spiked to 5% in response to comments made by Federal Reserve Chair Jerome Powell. The Dow Jones Industrial Average (^DJI) fell 0.4% or 120 points, while the S&P 500 (^GSPC) dropped 0.8%, both on track for a losing week. The tech-heavy Nasdaq Composite (^IXIC) also saw a 1.1% decrease.
The sell-off was triggered by Powell’s indication that the Fed intends to maintain its “higher for longer” rates stance, which caused Treasury yields to rise. The benchmark 10-year yield (^TNX) briefly reached 5% late on Thursday, a significant level not seen since July 2007.
Greg Whiteley, a portfolio manager at DoubleLine, shared his perspective, stating, “The underlying message is ‘don’t be looking for a bailout from the Fed anytime soon.’ That gives people the go-ahead to take rates above 5%.”
Although the yield on the 10-year retreated from the 5% level on Friday, dropping to around 4.91%, the potential for further pressure on stocks remains. Investors hoping for positive earnings reports to boost market sentiment have yet to find relief, despite strong financial performances.
The risk of the Israel-Hamas conflict escalating into a wider Middle East dispute also continues to weigh on the markets. The statement by Israel’s defense chief hinting at a possible ground assault on Gaza over the weekend has heightened concerns.
Expectations Key in Fed’s Inflation Fight
In their efforts to bring inflation back to a 2% level, the Federal Reserve is relying heavily on Americans’ expectations regarding future inflation. Fed Chair Powell has been consistently stating that inflation is too high, not only based on data but also to shape public expectations. The Fed’s forward guidance and communication strategies have a genuine impact on market behavior and help set the tone for future monetary policy.
Powell’s recent speech emphasized the importance of managing inflation and the potential consequences of doing too little to curb it. By repeatedly asserting that rate hikes will occur, the Fed seeks to influence public beliefs to align with their desired outcome.
Stocks Trending in Afternoon Trading
During Friday’s afternoon trading session, several stocks were leading Yahoo Finance’s trending tickers page:
- Bitcoin (BTC-USD): The leading cryptocurrency experienced a brief surge above $30,000 after the Securities and Exchange Commission dropped legal charges against two cryptocurrency executives from Ripple Labs. This news served as a victory for the industry amidst ongoing regulatory threats.
- ARM (ARM): Shares of the chipmaker fell by more than 2% following KeyBanc analysts initiating coverage with an “Overweight” rating.
- SolarEdge Technologies (SEDG): The solar equipment maker’s shares plummeted more than 25% after a challenging earnings report. The company cited “substantial unexpected cancellations” from European distributors, triggering a sell-off in solar-based stocks. Deutsche Bank downgraded Sunnova Energy (NOVA), Sunrun (RUN), and SolarEdge to “Hold” from “Buy” due to slowing demand in the United States and Europe.
- Regions Financial Corp (RF): Shares dropped over 11% after the lender announced an anticipated decline in fourth-quarter net interest income.
- Knight-Swift Transportation (KNX): The trucker’s shares surged 10% following better-than-expected quarterly earnings.
Stocks Slide in Afternoon Trading
The stock market’s negative sentiment persisted during Friday’s afternoon trading session as rising bond yields continued to impact stocks. The S&P 500 (^GSPC) experienced a 0.7% loss, while the Dow Jones Industrial Average (^DJI) decreased by 0.3%. The tech-heavy Nasdaq Composite (^IXIC) saw a decline of 1%.
Stocks Trending in Morning Trading
Yahoo Finance’s trending tickers page highlighted the following stocks during Friday morning’s trading session:
- Enphase Energy (ENPH): The energy-focused technology company fell 10% following a difficult earnings report from SolarEdge Technologies (SEDG). SolarEdge experienced “substantial unexpected cancellations” from its European distributors, leading to a sell-off in solar-based stocks.
- Intuitive Surgical (ISRG): The healthcare robotics company’s shares dropped 5% after reporting third-quarter revenue below expectations.
- Regions Financial Corp (RF): Shares fell over 15% as the lender predicted a decline in fourth-quarter net interest income.
- Knight-Swift Transportation (KNX): The trucker’s shares surged 10% after reporting higher-than-expected quarterly earnings.
Stocks Open Lower as Investors Grapple with Bond Market Surge
Investors started the day with a pessimistic outlook as rising 10-year Treasury yields attracted attention. Despite strong corporate earnings, the S&P 500 (^GSPC) experienced a slight decline of 0.1%, while the Dow Jones Industrial Average (^DJI) fell by 0.04%. The Nasdaq Composite (^IXIC) dropped 0.4%.
Stocks Trending in Premarket Trading
Leading Yahoo Finance’s trending tickers page before the market opened were:
- American Express (AXP): The credit card giant’s shares fell approximately 1% after reporting third-quarter profits that exceeded expectations.
- Regions Financial Corp (RF): The lender’s shares declined over 7% following the announcement of an anticipated decrease in fourth-quarter net interest income.
- Knight-Swift Transportation (KNX): The trucker’s shares surged 12% after reporting quarterly earnings that surpassed analysts’ estimates.
- Bitcoin (BTC-USD): The leading cryptocurrency rose above $30,000, reaching its highest level since July.
– By Jenny McCall
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