On Thursday, U.S. markets fell as bond yields fell, reflecting investor anxiety that a recurrence of COVID cases in some nations could stymie the global economic recovery. What were the results of the major indices?
After plummeting more than 500 points at its session low, the Dow Jones Industrial Average DJIA, -0.75 percent closed down 259.86 points, or 0.8 percent, at 34,421.93.
The S&
The Nasdaq Composite COMP, -0.72 percent ended the day at 14,559.78, down 105.28 points, or 0.7 percent.
Stocks moved up on Wednesday, with the S&P 500 increasing 0.3 percent and the Nasdaq Composite gaining little over 1 point — enough to propel both indexes to new highs. The Dow finished at 34,681.79, up 104.42 points, or 0.3 percent.
What was the market’s driving force? The decline in U.S. stock benchmarks was linked, at least in part, to concerns that the recovery could be hampered by continuing supply bottlenecks and the spread of the COVID-19-causing delta version of the coronavirus. In a phone interview, Art Hogan, chief market strategist at B. Riley-National, described the price movement as a “tug of war between fears of inflation and fears of growth peaking.” Fears of a spike in inflation are being replaced, he added, by the concern that “this is as good as it’s going to get” in terms of economic growth. As bottlenecks are resolved and business earnings reports begin to pour in next week, such fears are likely to be unjustified, according to Hogan. Initial jobless claims increased to 373,000 from an upwardly revised 371,000 in the seven days ending July 3, according to the US Labor Department. Economists expected claims to fall to 350,000. Concerns over the slowing pace of economic recovery and diminishing expectations of prolonged inflation contributed to a strong decline in bond yields. After sliding below 1.25 percent, the 10-year U.S. Treasury yield BX:TMUBMUSD10Y was down 3.4 basis points at 1.287 percent, its lowest since February. The yield curve, which plots yields across Treasury maturities, has been dramatically flattened as long-dated yields have fallen. In a note, Steven Ricchiuto, chief U.S. economist at Mizuho Securities, noted that the flattening of the yield curve has already caused market participants to sell cyclical equities in favor of large-cap growth firms, virtually reversing the rotation towards value stocks seen since September. Analysts have scrambled to explain the Treasury rally, which has seen the 10-year yield fall from above 1.40 percent at the start of the month, with explanations ranging from a loss of faith in the economic recovery to global appetite for yield to technical factors such as a flush out of speculative bets on rising yields. Why has the 10-year Treasury yield dropped to its lowest level since February? According to one investor, government debt is the new meme asset on Wall Street. Technology stocks, on the other hand, did not benefit on Thursday as yields fell, as they normally do, possibly reflecting the notion that the sector’s valuations had been overstretched in recent sessions, making them vulnerable to profit-taking amid a broad market selloff, according to Hogan. Concerns over the delta version of the coronavirus, according to analysts, weighed on morale. Japan declared a state of emergency in Tokyo on Thursday, which could last until the end of the Olympic Games. Others, on the other hand, echoed the noon surge with a more upbeat tone. In a note, Esty Dwek, head of global market strategy at Natixis Investment Managers Solutions, stated, “Although the cyclical rotation has stalled for the time being, we feel there is still opportunity for it since there is more reopening to happen.” Which businesses were the subject of the investigation?
Tesla Inc. (TSLA, +1.27%) is an electric vehicle manufacturer.
On Thursday, Tesla introduced the Standard Range (SR) Model Y on its Chinese website, with a starting price of $276,000 ($42,589), down from $291,840 before government subsidies. According to the website, delivery will begin in August. Tesla’s stock increased by 1.3 percent.
Attorneys general from 36 states and the District of Columbia filed a lawsuit against Alphabet Inc.’s GOOG, -0.69% GOOGL, -1.13 percent Google late Wednesday, alleging antitrust violations. The stock dropped by 0.7 percent and 1.1 percent, respectively.
WD-40 Co. WDFC, +0.48 percent saw its stock rise 0.5 percent after the maintenance and cleaning products firm topped Wall Street forecasts with its results and guidance late Wednesday.
Concerns about the speed with which the global economy is recovering led to a drop in semiconductor equities. Micron MU, -1.42 percent, Nvidia NVDA, -2.30 percent, Qualcomm QCOM, -1.20 percent, and Intel INTC, -1.02 percent all sank 1.4 percent.
AMC Entertainment stock
AMC, +6.37% began the afternoon on a high note when retail traders on Reddit joined together after the stock dropped more than 20% this week. On the day, AMC stock was up 7.2 percent.
What happened in other markets?
The ICE U.S. Dollar Index DXY, -0.30 percent, a gauge of the currency’s performance against six major rivals, was down 0.3 percent.
Oil futures recovered early losses to end the day higher, with the US benchmark CL00, +1.43 percent gaining 1% to close at $72.94 a barrel. Gold GC00, +0.06% gave up a small early gain, slipping 0.1 percent to $1,800.20 an ounce.
The Stoxx Europe 600 SXXP, -1.72 percent, and the London Stock Exchange’s FTSE 100 UKX, -1.68 percent both ended the day down 1.7 percent.
In Asia, the Shanghai Composite SHCOMP, -0.79% lost 0.8 percent, Hong Kong’s Hang Seng Index HSI, -2.89 percent lost 2.9 percent, and Japan’s Nikkei 225 NIK, -0.88 percent lost 0.9 percent./n
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