Wall Street’s main indices struggled for direction on Wednesday as Treasury yields hit a 14-year high on hopes of big interest rate hikes, fueling budding optimism from a bright start to the earnings season.
Yields on the benchmark 10-year Treasury note climbed to their highest level since July 2008, with heavy selling in US government bonds, a weak US housing report failing to deter investors from selling bonds.
Housing starts, a measure of new residential construction, dropped 8.1% in September, in the latest sign of the economy losing steam, taking a hit from the Federal Reserve’s aggressive monetary policy tightening.
The PHLX Housing Index fell 3.4%, causing further pain in stock markets attempting to exit months of declines, with the three main indexes remaining deep in bear market territory.
While some gauges of equity market health have shown that the latest rally could be the start of a sustained move, many investors are waiting for signs of cooling to inflation, which is well above the Federal Reserve’s target.
The US central bank is likely to raise 75-basis points for the fourth time in a row in November this year.
Senior Portfolio Manager Robert Pavlik said, “We’ve probably just seen a bear market bounce and it’s going to happen in an environment like this where the market is going to be volatile unless the Fed raises its rates.” doesn’t feel comfortable enough to slow down.” Dakota Wealth in Fairfield, Connecticut.
“It probably won’t come until we start to see some weakness in the labor market, which is helping fuel inflationary pressures.”
According to Refinitiv data, analysts have lowered their third-quarter profit growth expectations for S&P 500 companies to just 2.8% from a forecast of 11.1% growth in early July.
At 10:41 a.m. ET, the Dow Jones Industrial Average was up 63.29 points, or 0.21%, at 30,587.09, the S&P 500 was down 3.85 points, or 0.10%, at 3,716.13 and the Nasdaq Composite was down 11.31 points, or 0.10%. at 10,761.10.
Netflix jumped 14.8% after attracting 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and is directed for an additional 4.5 million by the end of the year.
After companies posted better than expected quarterly gains, Dow Components Procter & Gamble Company and Traveler’s Company Inc. rose 3.4% and 2.6%, respectively.
Growth stocks including Amazon.com, Microsoft Corp and Alphabet Inc fell between 0.52% and 1.38%.
Tesla Inc added 0.15% ahead of its earnings after the bell, with a focus on any weakness in demand that is starting to weigh on the auto industry.
Apple Inc. is cutting production of the iPhone 14 Plus within weeks of the start of shipments. Shares of the company reversed the initial decline with a gain of 0.32%.
The decline issues to a 2.56-to-1 ratio on the NYSE and to a 1.92-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and five new lows, while the Nasdaq recorded 18 new highs and 100 new lows.
This story has been published without modification in text from a wire agency feed.
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