Post-Fed stock market rally fades

Bond prices fall, while yield on Treasury note rises; tech stocks climb on reports of high revenue.

Stocks held steady on Wall Street on Thursday, and bond prices gave back some of their big gains from the prior day as a rally fueled by the Federal Reserve’s announcement on interest rates Wednesday faded.

Yields ticked higher as bond prices fell. The yield on the 10-year Treasury note rose to 2.53 percent from 2.50 percent late Wednesday. It had plunged 0.11 percentage points the prior day, after the Fed threw cold water on speculation that it may get more aggressive in raising rates.

The Fed is hoping to lift rates gradually off their record lows, where they stayed for seven years after the 2008 financial crisis. With the pace of rate hikes set to be so slow, it may not be fair to call these Fed moves as “hiking” or “tightening,” said Rich Taylor, fixed-income client portfolio manager at American Century.

“We are in the beginning stages of a renormalization of interest rates,” Taylor said. “A 2.5 percent yield on a 10-year note is not a normal yield. It’s still a DEFCON 4, almost emergency-level rate.”

Taylor expects gains for the 10-year Treasury yield to remain modest, even with the Fed pledging more increases. Once the yield gets to 2.60 percent, he says many buyers will likely pounce given still-modest growth in the economy and inflation.

Thursday’s slight rise in yields dulled the appeal of dividend-paying stocks. Utility stocks in the S&P 500 index lost 1.1 percent, the biggest loss among the 11 sectors that make up the index. Health care stocks were also weaker than the rest of the index, following a strong start to the year.

Technology stocks did better, led by Oracle, which reported stronger revenue and earnings for its latest quarter than analysts expected. The tech giant jumped $2.68, or 6.2 percent, to $45.73 for the biggest gain in the S&P 500.

GoPro, which makes wearable cameras, surged after it announced a cost-cutting plan and said it’s sticking by its forecast for 2017 profits. Its stock rose $1.16, or 15.8 percent, to $8.51.

Benchmark U.S. crude resumed its slide and slipped 11 cents to settle at $48.75 per barrel. It was the eighth drop for oil in the last nine days. Brent crude, which is used to price international oils, fell 7 cents to $51.74 a barrel.

Natural gas fell 8 cents to settle at $2.90 per 1,000 cubic feet.