“The last couple of days, the market has been trying to digest the move in treasuries as you’ve had a pretty big backup in yields,” Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.
In a choppy session, the Dow Jones Industrial Average fell 6.71 points, or 0.02%, to 42,924.89, the S&P 500 lost 2.78 points, or 0.05%, to 5,851.20 and the Nasdaq Composite gained 33.12 points, or 0.18%, to 18,573.13.
Almost half of the S&P sectors were in the positive territory, with the consumer staple leading the pack up 0.92%.
The benchmark 10-year note yields earlier reached 4.222%, the highest since July 26, as investors reassessed expectations for the Federal Reserve’s policy trajectory. Yields dialed back a bit during the trading session.
“The big story overall is the rates back up and the concerns that the Federal Reserve made a policy error by moving too aggressively in September. That’s feeding through to a rate sell off on a global basis,” said Michael Green, portfolio manager at Simplify Asset Management. On the corporate front, GE Aerospace slumped 9% despite raising its profit forecast for 2024, as persistent supply constraints impacted its revenue. It pulled the broader Industrials index lower 1.19%. Overall the broader technology sector was up 0.15%. Microsoft rose 2.08%.
“During the earnings season, you often get this kind of choppiness, but there’s also increased uncertainty relative to the interest rate direction,” said Chuck Carlson, CEO at Horizon Investment Services.
The next few weeks are likely to be volatile for equity markets, as investors scrutinize company earnings, fresh economic data and results of the U.S. election, followed by a central bank meeting.
Traders are pricing in a 89.6% chance of a 25-basis-point interest-rate cut in November, according to CME’s FedWatch.
Among other earnings, Verizon fell 5.03% as the telecom giant missed estimates for third-quarter revenue.
3M slipped 2.31%, reversing its premarket gains, despite raising the low end of its full-year adjusted profit forecast.
Meanwhile, General Motors leapt 9.81% after the legacy carmaker’s third-quarter results beat Wall Street estimates, while Lockheed Martin dipped 6.12% after results.
Rate-sensitive homebuilding stocks slipped, with the PHLX Housing index dropping 3.05%, dragged down by a 7.24% fall in shares of PulteGroup despite the company beating profit and revenue estimates.
“The earnings themselves have been pretty good, it’s just the companies highly sensitive to interest rates are probably going to find a bit of headwind right now as investors sort out the whole interest rate story,” Carlson said.
Baker Hughes and Texas Instruments are scheduled to report earnings after the bell.
Declining issues outnumbered advancers by a 1.37-to-1 ratio on the NYSE. There were 186 new highs and 58 new lows on the NYSE.
The S&P 500 posted 15 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 72 new highs and 61 new lows.
Volume on U.S. exchanges was 11.45 billion shares, compared with the 11.28 billion average for the full session over the last 20 trading days.
