Breaking News Bar
updated: 2/21/2018 2:58 PM

US stocks pare early gains as bond yields surge

hello
Success - Article sent! close
  • FILE- In this Oct. 2, 2014, file photo, the Wall Street subway stop on Broadway, in New York's Financial District. The U.S. stock market opens at 9:30 a.m. EST on Wednesday, Feb. 21, 2018.

    FILE- In this Oct. 2, 2014, file photo, the Wall Street subway stop on Broadway, in New York's Financial District. The U.S. stock market opens at 9:30 a.m. EST on Wednesday, Feb. 21, 2018.
    Associated Press

 
 

Stocks indexes pared early gains Wednesday and were mostly lower in afternoon trading as investors reacted to a late-afternoon surge in bond yields. Bond prices fell, sending the yield on the U.S. 10-year Treasury note to its highest level in four years, following newly released minutes from the Federal Reserve's most recent meeting which showed bullish sentiment among policymakers, confirming their intention to further tighten credit. Banks rose along with the bond yields.

KEEPING SCORE: The Standard & Poor's 500 index fell 9 points, or 0.3 percent, to 2,706 as of 3:49 p.m. Eastern Time. The Dow Jones industrial average lost 130 points, or 0.5 percent, to 24,827. The Nasdaq added 23 points, or 0.3 percent, to 7,257. The Russell 2000 index of smaller-company stocks picked up 13 points, or 0.9 percent, to 1,543.

THE QUOTE: "We're moving back to normal volatility, we're moving back toward normal interest rates, normal inflation," said Erik Davidson, chief investment officer for Wells Fargo Private Bank. "This is what normal looks like."

FED WATCH: The minutes from last month's meeting of Federal Reserve policymakers encouraged investors. The minutes, released Wednesday afternoon, show that a majority of Fed officials at the meeting believed that improving global economic prospects and the effects of recently passed tax cuts had raised the prospect for solid economic growth and for continued interest rate increases in 2018. The Fed did not raise rates at the January meeting, which occurred before the February stock market plunge and turbulence.

BOND YIELDS: Bond prices fell. The yield on the 10-year Treasury climbed to 2.94 percent from 2.89 percent late Tuesday.

The yield on the 10-year Treasury, which is used as a benchmark for mortgages and other loans, has been rising in recent months from a low of 2.04 percent in September. Higher bond yields indicate investors expect more risk of inflation, and they also can threaten stock prices by making bonds more appealing versus stocks.

BANKING ON FINANCIALS: Banks and other financial companies helped drive the market higher. Zions Bancorporation added $1.03, or 1.9 percent, to $56.05.

IN GEAR: Advance Auto Parts vaulted 10.9 percent after reporting better earnings than analysts were expecting. The stock was the biggest gainer in the S&P 500, adding $11.45 to $116.80. Shares in rival auto parts retailer AutoZone also rose, climbing $13.03, or 1.8 percent, to $726.27.

ROOM TO GROW: Extra Space Storage added 3.2 percent after its results also came in ahead of forecasts. The stock rose $2.60 to $83.35.

RESTING EASY: La-Z-Boy jumped 8.1 percent after the furniture company had a better fourth quarter than analysts anticipated. The stock picked up $2.35 to $31.25.

STILL HURTING: Walmart shares continued to slide Wednesday, a day after posting its biggest single-day drop in 30 years. The stock lost $2.11, or 2.2 percent, to $92.

SAPPED: Devon Energy slid 9.7 percent after the energy company disclosed a smaller-than-expected profit and 2018 forecast that raised concerns with analysts. The stock gave up $3.36 to $31.29.

ENERGY: Benchmark U.S. crude slipped 1 cent to $61.78 per barrel in New York. Brent crude, used to price international oils, rose 20 cents to $65.45 per barrel in London.

BOND YIELDS: Bond prices were little changed. The yield on the 10-year Treasury held at 2.89 percent.

The yield on the 10-year Treasury, which is used as a benchmark for mortgages and other loans, has been rising in recent months from a low of 2.04 percent in September. Higher bond yields indicate investors expect more risk of inflation, and they also can threaten stock prices by making bonds more appealing versus stocks.

CURRENCIES: The dollar rose to 107.40 yen from 107.30 yen on Tuesday. The euro strengthened to $1.2355 from $1.2336.

METALS: Gold rose 90 cents to $1,332.10 an ounce. Silver added 18 cents to $16.62 an ounce. Copper gained 3 cents to $3.22 a pound.

MARKETS OVERSEAS: Major indexes in Europe were mostly lower. Germany's DAX slipped 0.1 percent, while France's CAC 40 rose 0.2 percent. Britain's FTSE 100 added 0.5 percent. In Asia, Japan's Nikkei 225 index climbed 0.2 percent and Hong Kong's Hang Seng gained 1.8 percent. Australia's S&P ASX 200 edged 0.1 percent higher. The Kospi in South Korea added 0.6 percent. India's Sensex gained 0.3 percent. Shares in Southeast Asia were mixed.

Article Comments ()
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the X in the upper right corner of the comment box. To find our more, read our FAQ.