NEW YORK, NEW YORK – MARCH 15: Traders work on the floor of the New York Stock Exchange during morning trading on March 15, 2023 in New York City.
Miguel M. Santiago | fake images
Stocks fell on Thursday, deepening the week’s losses, as Treasury yields rose to multi-year highs amid the Federal Reserve’s plan to keep interest rates at higher levels for longer.
The Dow and S&P 500 were on track to end the week down more than 1% and 2%, respectively, while the Nasdaq was poised to fall about 3%. The major averages were also headed for their third straight daily loss.
He 10-Year Treasury Yield reached 4.48%, its highest in over 15 years, and the latest catalyst has been weekly jobless claims data showing a still strong labor market that could encourage the Federal Reserve to continue raising rates. Weekly jobless claims fell by 20,000 to 201,000 during the week ending Sept. 16, far less than the 225,000 claims expected by economists surveyed by Dow Jones. It was the lowest volume of new unemployment claims since January.
He 2 year performance surpassed 5.19% after Thursday’s jobs data, also the highest levels seen since 2007.
“That’s kind of a warning sign for markets right now,” Adam Turnquist, chief technical strategist at LPL Financial, said of the recent yield moves. He added that yields are “certainly weighing on risk appetite right now.”
The measures come a day after the Federal Reserve announced it would abandon interest rates unchanged, but predicted another rate hike before the end of the year. The central bank also indicated fewer rate cuts next year, essentially saying it would need to keep rates higher for longer due to persistent inflation.
Federal Reserve Chairman Jerome Powell commented after the decision that a soft landing for the economy was still possible, but not his base case.
“I think we’re seeing a clash between expectations and how things are actually going,” said Shelby McFaddin, an investment analyst at Motley Fool Wealth Management. “When you’re an investor… it doesn’t seem ideal because it seems to indicate a prolonged higher interest rate environment.”
Technology stocks have led losses this week as investors reconsider buying growth-oriented stocks if interest rates remain high. tesla, Alphabet, Metaplatforms and NVIDIA they were among the lowest on Thursday.
Marketing automation company Klaviyo, which debuted on the public markets on Wednesday, fell 3% on Thursday. That made the stock the latest in a series of promising IPOs to fall this week.
Fedex bucked the negative trend, gaining more than 5% after the delivery company posted adjusted earnings of $4.55 per share in its fiscal first quarter, while analysts were expecting $3.73 per share, per LSEG.