The US stock market closed on a subdued note on Friday, grappling with a notable surge in benchmark 10-year Treasury yields, reaching levels not seen in years. This development led to declines across the board for major indices, namely the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite. All three indexes reported weekly losses.
The downturn followed Federal Reserve Chairman Jerome Powell’s reaffirmation of the central bank’s commitment to a “higher for longer” rates policy. Powell’s comments ignited a surge in Treasury yields, propelling the benchmark 10-year rate to a pivotal 5%, a level of significance not witnessed since July 2007. Commenting on this, DoubleLine portfolio manager Greg Whiteley noted, “The underlying message is ‘don’t be looking for a bailout from the Fed anytime soon,” emphasizing the potential for rates to exceed 5%.
Despite investor anticipation for positive earnings reports to counter the prevailing gloomy outlook, stock prices remained subdued throughout the day. Moreover, the heightened risk of an escalation in the Israel-Hamas conflict further unsettled already anxious markets.
At the close of Friday’s trading session, the Dow Jones Industrial Average experienced a 0.9% decline, equivalent to a loss of 270 points. Similarly, the S&P 500 witnessed a 1.3% drop, while the technology-driven Nasdaq Composite recorded a 1.5% decrease. The benchmark 10-year yield did see a slight retreat to 4.91%, part of a broader recovery in fixed-income assets.
Despite some recovery from earlier losses, uncertainty looms over the future of US stocks. As the stock market grapples with surging Treasury yields, investors are closely monitoring the evolving financial landscape for signs of stability and potential opportunities.
With the potential for further shifts in the bond market, and geopolitical tensions persisting, investors are treading cautiously in the days ahead. The trajectory of the market remains uncertain as it navigates through these pivotal developments.
Source: Yahoo Finance
