NEW YORK (AP) — Stocks swung on Wall Street Thursday amid pressure from the highest bond yields in almost two decades and another rise in crude oil prices.
A morning dip for major indexes turned into an unsteady afternoon as oil prices jumped, eased and then regained ground. The bond market, meanwhile, continues applying pressure to stocks.
The S&P 500 fell 0.1% in afternoon trading, after it had briefly regained ground from a morning decline. The index
is headed for its third day of declines after climbing to the brink of its all-time high. The Dow Jones Industrial Average was down 153 points, or 0.3%, as of 2:14 p.m. Eastern time, and the Nasdaq composite fell 0.2%.
Stocks have slowed under the weight of higher yields in the bond market, which make borrowing money more expensive for everyone. That includes discouraged people trying to keep up with high inflation, businesses wanting to build data centers for artificial-intelligence technology and the U.S. government needing to cover the massive gap between its spending and revenue.
Yields at their highest levels in years are slowing the overall economy while also undercutting prices for stocks and other investments. The yield on the 10-year Treasury climbed again Thursday, to 5.16% from 5.11% late Wednesday.
It’s back to where it was in 2007 and up sharply from its 3.97% level before the war with Iran sent oil prices much higher. The price for a barrel of Brent crude in the most actively traded part of the market rose another 2.7% Thursday to $100.80. Prices have been volatile throughout the day.
Higher oil prices have helped push up the average price for a gallon of regular gasoline to $4.48 from less than $4.10 a month ago and from $3.16 a year earlier, according to AAA.
It’s not just worries about 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 last week raised its main interest rate 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 the 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 19.9% 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 2.1% 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 sank 0.8% and was one of the heaviest weights on the S&P 500.
Helping to keep the market's losses in check was Everpure. The data storage and management company's stock jumped 13.1% 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.
___
AP Business Writer Yuri Kageyama contributed to this report.
