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Rising Bond Yields Rattle Markets 10/01 09:36
Another crank higher in bond yields is rattling stock markets around the
world on Thursday and helping to overshadow optimism that the
artificial-intelligence industry can keep climbing.
NEW YORK (AP) -- Another crank higher in bond yields is rattling stock
markets around the world on Thursday and helping to overshadow optimism that
the artificial-intelligence industry can keep climbing.
The S&P 500 fell 0.2% after giving up an early gain and is heading toward
its seventh loss in the last eight days. The Dow Jones Industrial Average was
down 191 points, or 0.4% as of 10:15 a.m. Eastern time, and the Nasdaq
composite was 0.1% lower.
The losses were even sharper in Europe, where bond yields saw a significant
jump overnight. Stock indexes tumbled 1.6% in London and 1.3% in Paris after
the yield on the 10-year U.K. government bond swung as high as 5.53% before
falling to 5.37% and then charging upward again.
High yields slow the overall economy by making it more expensive for
everyone to borrow money, while undercutting prices for stocks and other
investments.
Yields are on the rise for a range of reasons, including worries about high
inflation and oil prices, signals that the U.S. economy remains solid and
governments' insistence to continue to spend much more money than they bring in.
Those worries don't look to be going away anytime soon, and oil prices
climbed again Thursday to keep the pressure up on inflation. The price for a
barrel of Brent crude jumped 3.3% to $101.24, continuing its swings on
uncertainty about when the war with Iran will allow the global oil industry to
return to normal.
Further reports also signaled the U.S. economy is powering through its many
challenges. Fewer U.S. workers applied for unemployment benefits last week,
which could mean fewer layoffs. That followed a report on Wednesday that said
the U.S. economy's overall growth was even stronger in the spring than earlier
thought.
A separate report on Thursday said that growth for U.S. manufacturing also
continued in September. Potentially more concerning in that report from the
Institute for Supply Management, though, was that increases in prices
accelerated, which could further pressure inflation.
The yield on the 10-year Treasury rose to 5.32% following the manufacturing
report, up from 5.29% late Wednesday. That's near its highest level since 2002,
and it's up from less than 5% roughly a week ago and from less than 4% before
the war with Iran began.
On Wall Street, strength for technology stocks helped limit the losses after
Micron Technology delivered a stronger profit report for the latest quarter
than analysts expected. The maker of memory chips for computers also said
growth is strengthening, and it gave forecasts for upcoming profit and revenue
that topped analysts' estimates.
CEO Sanjay Mehrotra said it's benefiting from the AI boom, which is driving
demand for memory.
Micron's stock fell 3%, which some analysts attributed to how much its stock
had already jumped before the profit report. It came into the day with a gain
of more than 270% for the year so far, towering over the less than 12% rise for
the overall S&P 500.
But other AI-related stocks benefited from Micron's optimism about continued
demand related to AI. Nvidia rose 0.6%, and Applied Materials added 3.4%
Outside of tech, Accenture leaped 23.2% after the consulting and services
company reported stronger profit for the latest quarter than analysts expected.
It saw growth around the world, from the Americas to Asia.
In stock markets abroad, Asian indexes did better than the rest of the world
thanks to optimism around AI following Micron's profit report. Japan's Nikkei
225 jumped 3.3%, and South Korea's Kospi climbed 1.9%.
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