US stocks close strongly on rising government bond yields

So far, 33 S&P 500 companies have reported results in the fourth calendar quarter, with nearly 70% posting results that beat analysts’ expectations.

4:05 p.m .: US stocks fall as yields rise

US stocks closed strongly on rising government bond yields.

The closely watched 2-year yield crossed the 1% mark for the first time since February 2020, the month before the pandemic was declared that plunged the US economy into recession. The 2-year Treasury is seen as an indicator of where the Federal Reserve will set short-term borrowing rates.

Yields rose along the yield curve, with the benchmark 10-year note hitting 1.86%, its highest level since January 2020. The 10-year yield started 2022 around 1.5%.

On the day, the DJIA fell 554 points, or 1.54%, to 35,382 and the S&P 500 fell 1.82% to 4,578.

The tech-heavy Nasdaq fell 386 points, or 2.60%, to 14,506.

12:05 p.m .: Downward trend in US markets

U.S. stocks continued to slide midday on Tuesday as investors watched earnings reports from some major companies and worried about impending interest rate hikes.

By noon, the Dow Jones Industrial Average fell 1.4%, or 494 points, to 35,418, while the broader S&P 500 and Nasdaq Composite continued to trade in the red, losing 1.4 respectively. % and 1.8%.

“The long weekend did not improve the mood of US traders, and further declines were seen in equity markets this afternoon,” said Chris Beauchamp, chief market analyst at the trading platform. online IG.

“It appears the combination of earnings season and an impending FOMC decision continues to provide strong incentive to reduce exposure to US equities,” Beauchamp said. “Disappointment with bank earnings remains a feature of the reporting season so far, indicating that investors will demand much stronger performance from their stocks in a world of higher yields.”

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9:52 am: US stocks down sharply at open

U.S. stocks began falling firmly on Tuesday after Wall Street closed Monday for Martin Luther King Day, as traders once again turn their eyes to corporate earnings this week.

In New York, the Dow Jones Industrial Average began falling 521 points to 35,390.

The S&P 500 was down more than 61 points at 4,600. The tech-laden Nasdaq was down about 228 points at 14,664.

Attention also turned to a mega-deal unveiled by IT giant Microsoft, which would see it buy Call of Duty and Candy Crush games company Activision Blizzard Inc (NASDAQ:ATVI) in a deal entirely in cash valued at US$68.7 billion.

Apparently the deal, if approved by regulators, would make Microsoft the world’s third-largest games company by revenue.

Activision Blizzard shares rose nearly 30% on the news.

6:30 am: US stocks set to open

U.S. stocks are set to start trading lower as markets reopen from the Martin Luther King Jr Day holiday on rising bond yields and higher interest rate expectations in March.

Dow Jones Industrial Average futures fell 0.75% in pre-market trading on Tuesday, while the broader S&P 500 index lost 1.15% and those of the tech-heavy Nasdaq 100, fell 1.79%.

Shares closed mixed on Friday as investors showed disappointment with fourth-quarter earnings from major US banks and data showed retail sales fell 1.9% in December, far more than the drop 0.1% that economists had predicted.

The Dow Jones fell 202 points, or 0.56%, to 35,912 but the S&P 500 added 0.08% to 4,663 and the Nasdaq gained 0.59% to 14,894.

“The key thing to watch today as U.S. traders return to their desks after the MLK vacation is whether the bond rout continues or abates,” commented Neil Wilson, chief market analyst. atmarkets.com.

“It hasn’t been a straight line so far this year and we can expect bumps and retracements as markets adjust to inflation dynamics and Fed policy expectations. Waller’s comments from the Fed around a 50 basis point hike in March (saying he was not in favor of it but suggesting enough was talked about) led the market to think the Fed could catch up faster than expected.

Stephen V. Lee