U.S. stocks, bond yield slump, sig­nal­ing mar­ket jit­ters

The News-Times - - BUSINESS -

U.S. stocks fell broadly Tues­day as anx­ious in­vestors shifted money into bonds, send­ing yields to their low­est level in nearly two years.

Ris­ing bond prices, which pull yields lower, are typ­i­cally a sign that traders feel jit­tery about long-term growth prospects and would rather put their money into safer hold­ings.

The yield on the bench­mark 10 year Trea­sury fell to 2.26 per­cent Tues­day, the low­est level since Septem­ber 2017. That put it be­low the 2.35 per­cent yield on the three­month Trea­sury bill.

When that kind of “in­ver­sion” in bond yields oc­curs, economists fear it may sig­nal a re­ces­sion within the com­ing year.

It has hap­pened mul­ti­ple times so far this year.

In­vestors have been weigh­ing a mix of en­cour­ag­ing and dis­cour­ag­ing eco­nomic re­ports this year as they also keep an eye on un­pre­dictable swings in the es­ca­lat­ing trade war be­tween the U.S. and China.

“If the bond mar­ket was say­ing that the econ­omy is on OK foot­ing then you wouldn’t see yields fall like they are,” said Wil­lie Del­wiche, in­vest­ment strate­gist at Baird. “In many re­spects, eq­ui­ties are wak­ing up to what’s hap­pen­ing in bonds.”

The S&P 500 in­dex fell 23.67 points, or 0.8 per­cent, to 2,802.39. The in­dex had been up 0.5 per­cent ear­lier in the day.

The Dow Jones In­dus­trial Av­er­age dropped 237.92 points, or 0.9 per­cent, to 25,347.77, af­ter ris­ing about 131 points ear­lier. The Nas­daq com­pos­ite dropped 29.66 points, or 0.4 per­cent, to 7,607.35. The Rus­sell 2000 in­dex of smaller com­pa­nies gave up 10.09 points, or 0.7 per­cent, to 1,504.02.

Ma­jor stock in­dexes in Europe also de­clined.

U.S. stocks headed higher in the early go­ing Tues­day as the mar­ket re­opened af­ter Mon­day’s Memo­rial Day holiday clo­sure. But in­dexes re­versed course by mid­day and never re­cov­ered.

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