Bond yields fall again as stocks pull back

Technology, financial and communication companies propel slide

Stocks closed lower Thursday on Wall Street as bond yields fell again and investors turned cautious following the market’s recent run of record highs.

The S&P 500 fell 0.9 percent, weighed down by a broad slide driven mainly by technology, financial, industrial and communication companies. The benchmark index’s pullback comes a day after it hit its eighth all-time high in nine trading days.

The yield on the 10-year Trea

sury note fell to 1.30 percent, the lowest level since February, after slipping to 1.32 percent a day earlier. The benchmark yield, which is used to set rates on mortgages and many other kinds of loans, has been falling steadily in recent weeks as traders shift money into bonds. The 10-year yield traded as high as 1.74 percent at the end of March.

The bond market has been signaling concerns over the strength of the recovery for months, specifically that it may have peaked and is now leveling off to a steadier pace. The stock market has largely ignored those signals, analysts said, but could be coming around to that message amid struggling job growth and lackluster economic reports.

“You can’t ignore what the bond market has been telling us,” said J.J. Kinahan, chief strategist with TD Ameritrade.

The S&P 500 fell 37.31 points to 4,320.82. The Dow Jones Industrial Average lost 259.86 points, or 0.7 percent, to 34,421.93. The Nasdaq composite snapped a three-day run of closing highs, dropping 105.28 points, or 0.7 percent, to 14,559.78.

Smaller company stocks also fell. The Russell 2000 index slid 21.17 points, or 0.9 percent, to 2,231.68.

Longer-term yields tend to move along with investors’ expectations for inflation and economic growth, and both are still very strong and much higher than they’ve been in recent years. But Wall Street increasingly suspects they’ve already topped out as the economy moves past the initial catapult phase of its recovery from the pandemic.