US stocks fall as yields rise, Fed notes

US stocks fall as yields rise, Fed notes
US stocks fall as yields rise, Fed notes
  • Fed looms over broader markets, dollar rises
  • Oil falls on demand worries, US railroad strike averted
  • Treasury yields rise when oil and gold fall

NEW YORK, Sept 15 (Reuters) – Wall Street indexes were firmly in the red during Thursday’s session after a weak start, while bond yields rose as investors digested economic data.

Oil futures fell more than 3 percent on demand concerns and a tentative deal to avert a U.S. rail strike, as well as continued U.S. dollar strength on expectations of a big U.S. interest rate hike. Read more

U.S. retail sales unexpectedly rebounded in August as Americans took advantage of lower gas prices, increased car purchases and ate more food, economic data showed. But the July figures were revised down rather than showing a drop in retail sales as previously reported.

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Separately, the Labor Department said initial claims for state jobless benefits fell to their lowest level since late May in the week ended Sept. 10. Read more

Investors are widely expecting a major rate hike after next week’s Federal Open Market Committee (FOMC) meeting, but are nervously awaiting Fed Chairman Jerome Powell’s guidance on future policy moves, said Quincy Crosby, chief global strategist at LPL Financial.

“The market remains active knowing that the Fed meeting is next week. “While participants agree that a 75 basis point increase is likely, they are concerned about the previous comment and what Chairman Powell said at his press conference,” Crosby said.

The Dow Jones Industrial Average (.DJI) 173.07 points, or 0.56%, to 30,962.02; The S&P 500 (.SPX) Nasdaq Composite lost 44.69 points, or 1.13%, to 3,901.32. (.IXIC) was down 167.32 points, or 1.43%, at 11,552.36.

MSCI’s measure of the world’s stocks (.MIWD00000PUS) Emerging market stocks fell 0.96% for the period (.MSCIEF) lost 0.57%.

Stocks, bonds and currencies showed the market Thursday that “there is a growing sense that the Fed will take more aggressive hikes next week,” said Scott Lautner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

Noting in particular the still-strong labor market, Lautner said “the economic data released today makes the situation worse.”

Treasury yields hit new 15-year highs in two years after retail sales and jobless claims data showed a resilient economy, giving the central bank plenty of room to raise interest rates aggressively.

The spread between the 2-year and 10-year bond yields widened further to -41.4 basis points, compared to -13.0 basis points a week ago.

The benchmark 10-year note rose 4.5 basis points to 3.457% from 3.412% late on Wednesday. The 30-year note fell in price 5/32 from 3.469% to yield 3.4779%. The 2-year note last fell in price on May 32 to yield 3.8646% from 3.782%.

“In this vicious circle, the data will continue to be resilient, indicating a central bank that will certainly continue and continue to tighten policy,” said Subatra Rajapa, head of U.S. interest rate strategies at Societe Generale in New York.

Also weighing on investor sentiment on Thursday was the World Bank’s assessment that the world could be headed for a global recession as central banks around the world simultaneously raise interest rates to combat stagnant inflation. Read more

Among currencies, the dollar was slightly higher against the yen, while the Swiss franc hit its strongest level against the euro since 2015. Read more

The dollar index, which measures the greenback against a basket of major currencies, rose 0.091 percent, while the euro rose 0.18 percent to $0.9995.

The Japanese yen weakened 0.19% against the greenback to 143.44 per dollar, while sterling last traded at $1.1469, down 0.57% on the day.

Fears of a strike by US rail workers, ahead of a tentative labor agreement, supported oil prices on Wednesday amid supply concerns. Additionally, the International Energy Agency (IEA) said this week that growth in oil demand will stall in the fourth quarter.

U.S. crude fell 3.82 percent to $85.10 a barrel, while Brent fell 3.46 percent to $90.84.

Gold fell to its lowest level since April 2021, hit by lower U.S. Treasury yields and a stronger dollar, as bets on another huge central bank rate hike undermined the bullion’s appeal.

Spot gold fell 1.9% to $1,664.46 an ounce. U.S. gold futures were down 2.02% at $1,662.30 an ounce.

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Additional reporting by Herbert Lash in New York, Mark Jones in London, Stefano Repado in Milan, Tom Westbrook in Singapore and Wayne Cole in Sydney; Editing by Kirsten Donovan and Jonathan Otis

Our standards: Thomson Reuters Trust Principles.

The article is in bulgaria

Tags: stocks fall yields rise Fed notes