Wall Street falls as Treasury yields rise, investors digest inflation
data
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[October 13, 2023] By
Sinéad Carew and Shashwat Chauhan
(Reuters) - Wall Street's main indexes closed lower on Thursday after a
U.S. Treasury auction sent bond yields higher while investors were
already digesting data that showed consumer prices rose more than
anticipated in September.
Surging shelter costs pushed consumer prices higher last month while the
annual increase in the core figure, excluding volatile food and energy
components, was the smallest in two years.
After the data, the S&P 500 spent the morning zig-zagging between red
and green. It turned decisively lower after a 1 p.m. EDT (1700 GMT)
auction of 30-year U.S. Treasuries met weak demand.
"The biggest overhang to the market the last two months has been the
rise in interest rates. Any meaningful move one way or the other on any
given day is going to have an impact on equities," said Michael James,
managing director of equity trading at Wedbush Securities in Los
Angeles.
After Thursday's auction "the magnitude of the move higher in rates
caused a significant downward dislocation in equities across the board,"
James added.
The Dow Jones Industrial Average fell 173.73 points, or 0.51%, to
33,631.14, the S&P 500 lost 27.34 points, or 0.62%, to 4,349.61 and the
Nasdaq Composite dropped 85.46 points, or 0.63%, to 13,574.22.
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U.S. benchmark 10-year yields rose after the inflation data and climbed
further to hit a session high after the auction. The benchmark yield
rose as high as 4.728%, its highest-level since Friday after falling for
the last two days.
Among the S&P 500's 11 major industry sectors, the biggest decliner was
materials, ending down 1.5%. The rise in yields particularly pressured
rate-sensitive sectors such as utilities, down 1.5% and real estate down
1.3%, its second and third biggest decliners.
Homebuilding stocks fell after the data and came under more pressure
after the afternoon increase in bond yields. The iShares Home
Construction ETF ended down 4.62% for its biggest one-day percentage
decline in almost a year.
The sole S&P sector gainers were information technology, up 0.1% and
energy, up 0.09%.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File
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Boston Fed President Susan Collins, who does not have a vote on the
rate-setting Federal Open Market Committee (FOMC) this year, said on
Wednesday that while the odds of the economy escaping a recession
have grown, it is possible the central bank is not done with
interest rate hikes aimed at bringing inflation back to its target.
Investors were also carefully monitoring developments in the Middle
East. Gaza moved closer to a humanitarian catastrophe as the death
toll rose and vital supplies ran low, while Israel massed tanks on
the enclave's border ahead of an anticipated ground invasion amid
international calls for restraint.
Investor focus may soon shift to the earnings season on Friday, with
big banks including JPMorgan Chase, Wells Fargo and Citigroup
reporting their quarterly numbers before the market open.
Among individual stocks, Fastenal rallied 7.5% after the industrial
supplies company beat third-quarter profit estimates.
Ford Motor fell 2% after the United Auto Workers (UAW) union
expanded its strike at the company's biggest and most profitable
factory.
Declining issues outnumbered advancing ones on the NYSE by a
4.46-to-1 ratio; on Nasdaq, a 2.89-to-1 ratio favored decliners.
The S&P 500 posted 17 new 52-week highs and 37 new lows; the Nasdaq
Composite recorded 38 new highs and 322 new lows.
On U.S. exchanges 10.91 billion shares changed hands compared with
the 10.75 billion moving average for the last 20 sessions.
(Reporting by Sinéad Carew in New York, Amruta Khandekar, Shashwat
Chauhan and Ankika Biswas in Bengaluru; Additional reporting by
Johann M Cherian; Editing by Arun Koyyur, Shounak Dasgupta, Maju
Samuel and David Gregorio)
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