Home Most Popular <!DOCTYPE html> <html> <head> <title>Impact of Bond Yields on Stock Market – A Closer Look</title> </head> <body> Market Turmoil: Bonds Surge as Stocks Stumble

Impact of Bond Yields on Stock Market – A Closer Look Market Turmoil: Bonds Surge as Stocks Stumble


Market Overview

As the sun rose on Wall Street this morning, the S&P 500 Index faced a daunting -1.06% descent, while the Dow Jones Industrials Index stumbled by -1.08%, with the Nasdaq 100 Index trailing at -1.51%.

Investors grappled with tumbling stocks prevailing as 1-1/2 week lows, a domino effect of escalating bond yields. The 10-year T-note yield rocketed to a 4-month peak, mirroring the economic vigor showcased by the US Mar ISM manufacturing index. The robust expansion, the strongest in 1-1/2 years, throttled expectations of Fed rate cuts, casting a shadow on stock prospects.

US Economic Insights

US Feb JOLTS job openings defied expectations, surging by +8,000 to 8.756 million, deftly painting a picture of a sturdy labor market. Additionally, Feb factory orders gained +1.4% m/m, outperforming anticipations and adding a hawkish nod to the Fed’s policy.

The probability of a -25 bp rate cut stands at 7% for the imminent FOMC meeting on April 30-May 1, escalating to 64% for the subsequent rendezvous on June 11-12.

Bitcoin (^BTCUSD) nosedived over -5% to touch a 1-week nadir, grappling with receding demand for Bitcoin ETFs amid bleak Fed rate cut projections. Alarming data revealed a net withdrawal of $86 million from Bitcoin ETFs on Monday, ushering in a somber phase for the cryptocurrency.

Global Markets Outlook

Amidst the global financial melee, the Euro Stoxx 50 recoiled from a 23-year pinnacle, diving by -0.70%. Meanwhile, China’s Shanghai Composite retreated by -0.08%, offering a mixed snapshot of overseas jitters. The Japanese Nikkei Stock Index, however, bucked the trend, closing up marginally by +0.09%.

Interest Rate Rumble

June 10-year T-notes bore the brunt, plunging by -7 ticks, as the 10-year T-note yield catapulted by +6.2 bp to a staggering 4.371%. The surge came on the heels of peppy US economic news on Feb JOLTS job openings and Factory Orders, supplemented by burgeoning inflation expectations.

The Eurozone witnessed a swift uptick in government bond yields, with the 10-year German bund yield ascending to a 1-1/2 week peak of 2.435%. European markets danced to the tunes of an upwardly revised Mar S&P manufacturing PMI, underscoring the region’s economic pulse.

Stock Market Rollercoaster

A ripple effect reverberated through the stock market, upending health insurance giants like Humana (HUM) and CVS Health (CVS), plummeting by over -13% and -8%, respectively. Tesla (TSLA) bore the brunt in the Nasdaq 100 realm, skidding by over -6% following tepid Q1 vehicle deliveries.

Amidst the tumult, energy stocks gyrated upwards, spurred by WTI crude oil’s ascent to a 5-1/4 month zenith. Riding the wave, Exxon Mobil (XOM) and Phillips 66 (PSX) carved significant gains, hinting at a sectoral revival.

Current Market Glimpse

Amidst the chaos, Roivant Sciences Ltd (ROIV) surfaced as a beacon of hope, soaring by +4% after announcing a hefty share repurchase program. Meanwhile, Olema Pharmaceuticals (OLMA) witnessed a modest uptick of over +1% post Golden Sachs’ upgraded coverage outlook.

Despite the turbulent seas, some stocks weathered the storm, with GE Verona (GEV) defying gravity with a commendable upsurge of over +3% post a buoyant coverage initiation by RBC Capital Markets.