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NYSE
Stocks fell Thursday, deepening losses for the week, as Treasury yields climbed to multiyear highs amid the Federal Reserve’s plan to keep interest rates at higher levels for longer.
The Dow Jones Industrial Average dropped 205 points, or 0.6%. The S&P 500 slid 1.%, and the Nasdaq Composite pulled back by 1.5%.
The Dow and S&P 500 were on track to end the week down about 1% and 2%, respectively, while the Nasdaq was poised to fall around 3%. The major averages were also headed for their third straight daily loss.
The 10-year Treasury yield hit 4.48%, its highest in more than 15 years, with the latest catalyst being weekly jobless claims data showing a still strong labor market that could encourage the Fed to stay in hiking mode. Weekly jobless claims decreased by 20,000 to 201,000 for the week ending Sept. 16, much lower than the 225,000 claims expected by economists polled by Dow Jones. It was the lowest volume of new unemployment claims since January.
The 2-year yield topped 5.19% after the jobs data Thursday, also the highest levels seen since 2007.
“That’s kind of a warning sign for markets right now,” said Adam Turnquist, chief technical strategist at LPL Financial, of recent yield moves. He added that yields are “certainly weighing on risk appetite at this point.”
The moves come a day after the Federal Reserve announced it would leave interest rates unchanged, but forecasted another rate hike before the end of the year. The central bank also indicated fewer rate cuts next year, essentially saying it would need to keep rates higher for longer because stubborn inflation.
Fed Chair Jerome Powell commented after the decision that a soft landing for the economy was still possible, but not his baseline scenario.
“We’re seeing a bit of a clash between, I think, what expectations are and how things are actually going,” said Shelby McFaddin, investment analyst at Motley Fool Wealth Management. “When you’re an investor … it doesn’t seem ideal because it seems to indicate a prolonged higher interest rate environment.”
Tech shares have led the losses this week as investors rethink buying growth-oriented stocks if interest rates remain high. Tesla, Alphabet, Meta Platforms and Nvidia were among those lower Thursday.
Marketing automation firm Klaviyo, which debuted on the public markets Wednesday, slipped 3% Thursday. That made the stock the latest in a string of promising IPOs that turned lower this week.
FedEx bucked the negative trend, gaining more than 4% after the delivery company posted adjusted earnings of $4.55 per share in its fiscal first quarter, while analysts called for $3.73 per share, per LSEG.
