NEW YORK (AP) — After whipping through a couple reversals, stocks on a suddenly shaky Wall Street are roughly back to where they began Thursday.
The S&P 500 was virtually unchanged in late trading following several turns between losses and gains. The Dow Jones Industrial Average was down 166 points, or 0.3%, with an hour remaining in trading, and the Nasdaq composite was basically flat.
Stocks have slowed their rally since the S&P 500 climbed to the brink
of its all-time high earlier this week as pressure from the bond market has cranked higher.
The yield on the 10-year Treasury climbed to 5.16% from 5.11% late Wednesday and briefly got near 5.18% earlier in the day. It's back to where it was in 2007, and high yields slow the overall economy by making it more expensive to borrow money while also undercutting prices for stocks and other investments.
Yields climbed through the morning, pushing stocks downward, until they took a sudden turn lower in the midday hours. The 10-year yield dropped from nearly 5.17% to less than 5.13% in about 20 minutes before ultimately turning higher again.
Once again, it was yields following the track of oil prices, which have been scattershot amid uncertainty about when the war with Iran will allow crude oil to flow freely again from the Middle East to customers worldwide.
The price for a barrel of Brent crude in the most actively traded part of the market went from $102 to roughly $99 in a matter of minutes midday Thursday. It later rose to settle at $100.22, up 2.1% from the prior day.
It’s not just worries about expensive oil and inflation that have sent Treasury yields higher. The U.S. economy continues to expand, which also supports yields. The bond market got a major jolt Wednesday after a preliminary report suggested U.S. business activity is growing at its fastest pace in years, while costs for corporate America are also rising quickly.
On Thursday, a report showed fewer U.S workers applied for unemployment benefits last week and further strengthened expectations for the economy.
Such numbers could convince the Federal Reserve that the economy can withstand more hikes to short-term interest rates. The Fed raised its main interest rate last week for the first time in three years in hopes of slowing the economy and removing some of the fuel for inflation.
Traders now see better than a coin flip’s chance that the Fed could raise rates twice more by the end of the year, according to data from CME Group.
So far, the solid overall economy has helped U.S. companies continue to deliver strong growth in profits. That in turn has helped their stock prices remain relatively strong despite worries about war, inflation and tariffs.
“The headlines have turned more ominous, but the underlying drivers of growth remain intact,” strategists at Barclays wrote in a report. “As long as AI-related investment, US corporate profitability, and consumer spending continue to beat expectations, the economy and markets seem capable of absorbing tighter central banks and higher rates.”
Stitch Fix became one of the latest U.S. companies late Wednesday to report better quarterly results than analysts expected. But its stock nevertheless tumbled 22% after it said “a more challenging consumer environment” could hold back its revenue growth this upcoming fiscal year.
Darden Restaurants, the company behind Olive Garden and LongHorn Steakhouse, fell 2.3% after reporting a profit for the latest quarter that matched analysts’ expectations.
High yields in the bond market hurt prices for all kinds of stocks, and they often hit those seen as the most expensive the hardest. That puts the target on AI stocks, which soared for years in the frenzy around the technology. Higher yields also make it more expensive for companies to borrow money to build AI data centers, which could slow their construction and restrain demand for AI chips.
Nvidia slipped 0.6% and was the heaviest weight on the S&P 500.
On the winning side of Wall Street was Everpure. The data storage and management company's stock jumped 14.9% after it stood by its financial forecasts for this fiscal year and said it expects revenue growth to accelerate in the following one.
In stock markets abroad, indexes fell modestly around much of the world. A drop of 1.2% in Shanghai and gain of 0.8% in Tokyo were two of the world’s bigger moves.
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AP Business Writer Yuri Kageyama contributed to this report.
