Wall Street closes near flat as Treasury yields surge
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[August 04, 2023] By
Echo Wang
(Reuters) - U.S. stocks closed little changed on Thursday after a choppy
trading session, as investors weighed another rise in Treasury yields
with the latest batch of economic data and earnings.
The benchmark U.S. 10-year Treasury yield rose as high as 4.198% during
the session, the highest since November, extending its climb from a day
earlier following Fitch's downgrade of the top-tier U.S. credit rating.
In late afternoon trade, the 10-year yield had dipped below 4.194.
“It’s really relative to just pricing against bond yields”, said Tom
Hainlin, national investment strategist at U.S. Bank Wealth Management
in Minneapolis. “Higher yield on 10-year treasuries, … has challenged
the attractiveness of stocks.”
A Labor Department report showed the number of Americans filing new
claims for unemployment benefits increased slightly last week, while
layoffs dropped to an 11-month low in July as labor market conditions
remain tight.
Investors were waiting for July's jobs report, due on Friday.
Another report showed the U.S. services sector slowed in July, but
businesses faced higher prices for inputs as demand continued to hold
up. Richmond Federal Reserve President Thomas Barkin said U.S. inflation
remained too high, although recent readings indicated price pressures
easing.
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The Dow Jones Industrial Average fell 66.63 points, or 0.19%, to
35,215.89, the S&P 500 lost 11.5 points, or 0.25%, to 4,501.89 and the
Nasdaq Composite dropped 13.73 points, or 0.1%, to 13,959.72.
Eight of the eleven main S&P 500 sectors declined, with more interest
rates sensitive Utilities and Real Estate leading losses, dropping 2.3%
and 1.4% respectively.
After the closing bell, Amazon.com shares surged when the online
retailer forecast third-quarter revenue above Wall Street expectations,
boosted by its Prime Day sale event in July that drew price-conscious
consumers to its platform.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., July 19, 2023.
REUTERS/Brendan McDermid/File Photo
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Apple shares dipped less than 1% in extended trade after the iPhone
maker reported quarterly results that beat forecasts.
Second-quarter earnings for companies in the S&P 500 are now
expected to fall 5% from a year earlier, according to Refinitiv
data.
Qualcomm shares dropped 8.2% after a gloomy forecast signaled more
pain for the biggest maker of smartphone chips from the ongoing
slump in the consumer electronics market.
PayPal Holdings tumbled 12.3% as investors were disappointed by the
payments firm's quarterly operating margin, even as executives said
they expect improvement.
U.S. travel stocks fell on downbeat quarterly reports from Spirit
Airlines and Expedia that amplified concerns domestic demand may be
easing after a strong rebound from pandemic lows.
Volume on U.S. exchanges was 12.08 billion shares, compared with the
10.5 billion average for the full session over the last 20 trading
days.
Declining issues outnumbered advancing ones on the NYSE by a
1.84-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.
The S&P 500 posted 14 new 52-week highs and 6 new lows; the Nasdaq
Composite recorded 58 new highs and 88 new lows.
(Reporting by Echo Wang in New York, Shubham Batra and Bansari Mayur
Kamdar in Bengaluru; Editing by Anil D'Silva and David Gregorio)
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