Bond yields surge
NEW YORK- A global index of stocks closed Wednesday’s choppy session slightly lower to extend the previous day’s sharp sell-off, as oil prices rallied and US Treasury yields climbed along with the dollar.
US crude oil futures briefly nudged above $94 per barrel, intensifying concerns about rising gasoline prices and their impact on inflation and consumer spending.
And the dollar index hit a 10-month high as it pushed the euro to a 9-month low, keeping the yen in intervention territory as investors bet the United States will cope better with higher interest rates than other economies. Stocks and bonds have been dropping in price in recent weeks as investors prepared for the prospect that central bankers will hold interest rates “higher for longer” than previously expected, to try to squeeze inflation out of global economies.
Irene Tunkel, chief US strategist at Montrealbased BCA Research, saw the increase in oil prices, interest rates and the US dollar as a “triple whammy for US equities” as investors worried about the impact on the economy.
And on top of this, they are also monitoring Detroit’s auto worker strikes and as well as the uncertainty of a potential US government shutdown in coming days.
“Investors are filled with apprehension right now over interest rates, the price of oil and labor relations,” said Steven Wieting, chief investment strategist at Citi Global Wealth.
“The volatility of the bond market is spilling over into the stock market.”
The Dow Jones Industrial Average fell 68.61 points, or 0.2 per cent, to 33,550.27, the S&P 500 gained 0.98 points, or 0.02 per cent, to 4,274.51 and the Nasdaq Composite added 29.24 points, or 0.22 per cent, to 13,092.85.
The pan-European STOXX 600 index earlier closed down 0.18 per cent.