More swings in the bond market rattled stock markets around the world on Thursday
On Wall Street, the moves were relatively modest after U.S. bond yields cranked higher but then gave back the gains later in the day. The S&P 500 rose 0.2 per cent and snapped a three-day losing streak.
The Dow Jones Industrial Average added 21 points, or less than 0.1 per cent, and the Nasdaq composite inched up by less than 0.1 per cent.
The moves were more dramatic in Europe, where stock indexes tumbled 1.7 per cent in London, 1.6 per cent in Paris and 1 per cent in Frankfurt. They were hurt by sharp moves for bond yields on that side of the Atlantic. The yield on the 10-year French government bond, for example, shot to nearly 4.95 per cent and then veered toward 4.80 per cent and back up to 4.90 per cent.
That is a punishing swing for the bond market, where moves get measured in hundredths of a percentage point.
High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments.
Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the U.S. economy remains solid and governments’ insistence to continue to spend much more money than they bring in.
Those worries don’t look to be going away anytime soon, and oil prices climbed again Thursday to keep the pressure up on inflation. The price for a barrel of Brent crude leaped 4.4 per cent to US$102.31 for its latest yo-yo move on uncertainty about when the war with Iran will allow the global oil industry to return to normal.
Further reports also signaled the U.S. economy is powering through its many challenges. Fewer U.S. workers applied for unemployment benefits last week, which could mean companies are laying off fewer workers.
A separate report on Thursday said growth for U.S. manufacturing also continued in September. Potentially more concerning in that report from the Institute for Supply Management was that increases in prices accelerated, which could mean further pressure on inflation.
It all sent the yield on the 10-year U.S. Treasury toward 5.34 per cent and its highest level since 2002. But the 10-year yield relented later in the day and pulled back to 5.23 per cent from 5.29 per cent late Wednesday. That helped stocks on Wall Street recover their losses and turn higher.
Still, the 10-year Treasury yield remains much higher than it was last week, when it was below 5 per cent, and from before the war with Iran began, when it was below 4 per cent.
On Wall Street, stocks benefiting from the boom around artificial-intelligence technology helped lead the way.
Optimism for the industry rose after Micron Technology delivered a stronger profit report for the latest quarter than analysts expected. The maker of memory for computers also said growth is strengthening, and it gave forecasts for upcoming profit and revenue that topped analysts’ estimates.
Micron’s stock rose 3 per cent to bring its stellar gain for the year so far to 284.5 per cent. Elsewhere in AI, Nvidia added 1.1 per cent and was the single strongest force lifting the S&P 500, while Applied Materials rose 3.5 per cent.
Outside of tech, Accenture leaped 15.8 per cent after the consulting and services company reported stronger profit for the latest quarter than analysts expected. It saw growth around the world, from the Americas to Asia.
They helped offset a 4.9 per cent drop for McCormick. The seller of cooking spices and Frank’s RedHot sauce reported a stronger profit for the latest quarter than analysts expected, but the midpoint of the range it gave as its forecast for revenue in its full fiscal year fell short of analysts’ estimates.
All told, the S&P 500 rose 14.91 points to 7,666.45. The Dow Jones Industrial Average added 20.51 to 50,926.56, and the Nasdaq composite edged up by 10.53 to 26,871.60.
In stock markets abroad, Asian indexes did better than the rest of the world thanks to tech companies benefiting from optimism around AI. Japan’s Nikkei 225 jumped 3.3 per cent, and South Korea’s Kospi climbed 1.9 per cent.
Stan Choe, The Associated Press
AP Business Writers Yuri Kageyama and Michelle Chapman contributed to this report.
