U.S. stocks finished slightly lower Thursday as investors contended with higher bond yields and the threat of inflation given expectations for the the economy to recover quickly later this year.
What did major indexes do?
The Dow Jones Industrial Average
was off 104.41 points, or 0.3%, to end at 33,066.96.
The S&P 500
fell 12.54 points, or 0.3%, to close at 3,958.55.
The Nasdaq Composite
shed 14.25 points, or 0.1%, to finish at 13,045.39.
On Monday, the Dow flipped positive in afternoon trade to end the day up 98.49 points, or 0.3%, to close at a record 33,171.37. The S&P 500 ended the session down 0.1%, while the Nasdaq Composite dropped 0.6% and the small-cap Russell 2000
What drove the market?
A brief bout of selling in U.S. Treasurys drove activity across markets Tuesday. The yield on the 10-year Treasury note
early Tuesday traded above 1.77% for the first time since January 2020 but ended flat around 1.72%, based on Tradeweb data.
The rise in yields lifted the U.S. dollar and weighed on equities. Analysts note higher yields indicate growing fears the Federal Reserve may move faster than it has signaled if inflation rears its head, putting an end to the extremely accommodative monetary policies which have buoyed markets since the start of the pandemic.
“We are already seeing that an improving economy is leading to higher interest rates. There is also the expectation that inflation could rise as a result. Taken together, cash flow is likely to be impacted. Stocks, companies and consumers will have to adjust to these new realities, which could take time,” said Lindsey Bell, chief investment strategist for Ally Invest, in a note.
were biggest losers in the Dow, down more than 1% each. Losses in the S&P 500 were led by utilities and technology stocks. However, stocks likely to benefit from reviving summer travel as the coronavirus pandemic fades saw gains. American Airlines
was up 4%, while United Airlines
Meanwhile, investors also are pondering the impact of President Joe Biden’s infrastructure plan which is expected to cost as much as $3 trillion to $4 trillion, offset by some tax hikes. Biden is set to announce parts of his plan on Wednesday.
Investors also looked out for any further selling of stocks after a large margin call on equity derivatives held by Archegos Capital Management that forced an estimated $30 billion in blxock sales, triggering plunges in shares of media companies involved in the fund’s positions. Big bank shares were also dented due to worries about their exposure to Archegos.
In U.S economic data, the Case-Shiller home price index for January showed an 11% year-over-year rise.
The Conference Board’s consumer-confidence index surged in March to a one-year high at 109.7 from a revised 90.4, lifted as more Americans got vaccinated and the government doled out $1,400 stimulus checks in a boost to the economy.
Which companies were in focus?
Shares of ViacomCBS Inc.
gained 3.6% after falling nearly 7% Monday and suffering steep losses last week in moves tied to the Archegos liquidation.
Shares of Goldman Sachs Group Inc.
rose 2% and Morgan Stanley
gained 1.6%. The banks moved large blocks of assets before other large banks that lended to Archegos Capital Management, as the scale of the hedge fund’s losses became apparent, according to The Wall Street Journal, helping to limit their losses amid the stock liquidation.
PayPal Holdings Inc.
shares added 0.4% after the payments company said it would start letting U.S. customers purchase items with cryptocurrencies.
Shares of videogame-retailer GameStop Corp.
rose 7.4% after it announced the appointment Tuesday of former Amazon executive Elliott Wilke to the role of chief growth officer effective April 5. Wilke has held a range of roles at Amazon in branding, consumer goods and e-commerce, in segments including Amazon Fresh, Prime Pantry and Worldwide Private Brands.
How did other markets trade?
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was up 0.4%.
Oil futures slid as the Suez Canal reopened to traffic and traders turned their attention to this week’s OPEC+ meeting, with the U.S. benchmark
losing $1.01, or 1.7%, to $60.55 per barrel.
Gold futures were under pressure as Treasury yields and the dollar rose, with the June contract
falling $28.30, or nearly 1.7%, to settle at $1,683.90 an ounce.
In Europe, the Stoxx 600 index
rose 0.8% and London’s FTSE 100
In Asia, the Shanghai Composite
rose 0.6%, while Hong Kong’s Hang Seng Index
rose 0.8% and Japan’s Nikkei 225
was up 0.2%.