Treasury yields surge pushes Wall Street lower

Darnell Taylor
May 16, 2018

The S&P 500 fell 0.7 percent, to 2,711.45.

On Tuesday, the bond market appeared to hold investors' focus.

The yield on 10-year US Treasury notes jumped to its highest level since July 2011, suggesting an uptick in inflation and sending the dollar index to its highest close in 2018, raising expectations for further interest rate hikes from the Federal Reserve. US shares were set to drift slightly lower, with Dow futures down 0.4 percent and S&P 500 futures 0.3 percent lower. The Nasdaq composite tumbled 1% and the S&P 500 0.8%. The Dow is on track for a gain of 2.2 percent, while the S&P 500 is closing in on a gain of 2.4 percent.

Among the technology stocks pressuring the overall market, Alphabet Inc., the parent company of Google, fell 2%, while Facebook Inc. lost 1.2%. "The most notable of these is the retail sales data for April, which is expected to be relatively good for a second consecutive month following a few poor numbers that were a little worrying", Craig Erlam, a senior market analyst for Oanda, said in a commentary. Bond yields tend to rise when investors expect faster economic growth and higher inflation.

A bunch of auditory neuroscientists hear "yanny", not "laurel"
If you heard Yanny, you probably can not fathom how someone else heard Laurel and vice versa. "There is no N sound". She hears "laurel", and is appaulded by the idea of anyone hearing "yanny".

"A little bit of today's jitters are related to a hangover to yesterday's wrongly placed exuberance that a trade deal was imminent, and the reality is we are in for a long slugfest between the U.S. and China", said Jon Mackay, investment strategist at Schroders North America in NY. The Shanghai Composite climbed 0.6 percent to 3,192.12.

In Asia, shares declined on Wednesday in morning session after North Korea pulled out of high-level talks with Seoul and as US Treasury yields rose to the highest level in seven years overnight.

Some banks got a boost from higher rates, which make loans more profitable. MGM Resorts rose 1.6 percent.

Stocks are opening moderately higher on Wall Street, led by gains in technology, health care and energy companies. Chip maker Nvidia fell 3.8 percent; drug maker Celgene slid 3.9 percent. Brent crude, used to price worldwide oil, gained 77 cents to $79.00 a barrel in London.

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