U.S. equities fall on Wednesday as pressure continue to build for bond market, pushing Treasury yields go reach levels wey nobody don see for more than two decades.
Dow Jones Industrial Average lose 341.41 points, or 0.66%, to close at 51,179.87. S&P 500 shed 0.22% to end at 7,801.77. Nasdaq Composite slip 0.22% to settle at 27,538.69.
Investors fear as benchmark 10-year Treasury note yield reach highest level since April 2002 at 5.365% on Wednesday. The 30-year bond yield also hit highest since May 2002 at 5.732%. The 10-year yield later back off its high of the day after auction where Treasury sell $39 billion in 10-year notes. The move for yield, wey last little changed, help stocks pare their declines.
Bill Merz, head of capital markets research at U.S. Bank Asset Management, talk say bid-to-cover ratio and indirect bidder participation dey quite strong. He talk say investor interest dey at these relatively elevated yield levels compared to wetin people don become used to for last 15 to 20 years, but we need take am with grain of salt. There plenty other drivers out there we need take into consideration on standalone basis, he talk. E call am solid auction.
Minutes from Federal Reserve September meeting show say officials anticipate raising rates before end of year, though no indication when exactly. Most participants assess say another increase in target range for federal funds rate likely appropriate by year end, minutes talk. Participants emphasize say they approach each meeting with open mind and decisions at future meetings go depend on incoming information and implications for outlook and balance of risks.
Latest rise in yields hit key areas of market. Bank stocks drop as investors fear higher interest rates go hinder lending activity. Shares of Goldman Sachs move down 1%, same for Bank of America. Others like Wells Fargo, Citigroup and JPMorgan also close lower on the day. Technology stocks also come under pressure amid worries say higher borrowing costs go limit artificial intelligence buildout. CrowdStrike shares lower by almost 5%, while Palo Alto Networks and Meta Platforms lose more than 3% and 2% respectively.
Mike Dickson, head of research and quantitative strategies at Horizon Investments, tell CNBC say with level of rates where they dey and rise we don see, e fair to characterize say margin for error don narrow as e relate to earnings, but earnings fit still carry market higher. He talk say level of yields seem very justified, but e no make them irrelevant. Even with latest rise in yields, inflation expectations appear very well anchored, Dickson talk. If 10-year start rising because inflation expectations become unanchored, well now e fit get small out of control.
U.S. crude prices settle down 1.3% at $88.28 per barrel on Wednesday. International Brent crude futures end at $100.20 a barrel, down 0.4%. S&P 500 close above 7,800 for first time on Tuesday, led by gains in chipmakers. The three leading U.S. indexes end Wednesday session in red.
Oil prices rise on Thursday on persistent worries about supply from Middle East amid increase in attacks on shipping in Gulf and Strait of Hormuz. Brent crude futures rise to $101.53 a barrel as of 01:16 GMT. U.S. West Texas Intermediate crude futures climb to $89.39 a barrel. IEA member countries say they stand ready to release additional oil from reserves if necessary and will prioritize diesel due to tight supplies, head of organisation say on Wednesday. G7 countries, in coordination with IEA, agree last Friday to immediately release 100 million barrels of diesel and crude oil to ease global energy supply concerns caused by fallout from United States-Iran war.
Latest announcement from IEA calm oil markets after prices climb on Wednesday following report from UK Maritime Trade Operations. The maritime agency say on Tuesday say nine attacks on tankers happen for Strait of Hormuz this month, representing half of September total in waterway and Gulf combined. U.S. Secretary of State Marco Rubio repeat Washington claims say it dey control strait and oil flows dey at close to normal levels.
Oil exports from Gulf don recover significantly in recent days despite surge in attacks on ships around Strait of Hormuz, maritime experts and trackers say. Gulf oil flows, excluding Iran, recover to more than 81 percent of pre-war levels in September, while crude exports from wider Middle East exceed pre-war levels on 14 days during month, maritime intelligence firm Kpler report. However, recovery come as attacks on tankers increase and shipping companies face higher freight, insurance and security costs. On Tuesday, 12 crew members on Panama-flagged tanker get injured in attack by unknown projectile while crossing Strait of Hormuz, India Ministry of External Affairs say in statement.
