On Thursday U.S. stocks fell while bond yields pushed higher as concern grows across markets that rising borrowing costs could sap a rally that’s driven equity values to historic highs. The tech-heavy Nasdaq 100 slumped 1.6% and the benchmark S&P 500 declined for a third day after a report showed initial jobless claims rose more than expected.
Walmart Inc. dropped after saying it will increase spending on worker salaries and automation. In Europe, banks led losses in the Stoxx 600 Index. “If I had a dollar for every person that told me that low rates can substantiate higher multiples even though rates were low because earnings and the economy were depressed,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “This rise in rates will certainly test the mettle and staying power of the bulls.”
Yields on 10-year Treasuries climbed to 1.31%, retracing the highest levels in a year reached earlier this week. Technology companies that derive much of their cash flows from future earnings are especially vulnerable to inflation pressures. “The market is starting to get a little wary of this ‘bad news is good news’ scenario,” said Matt Benkendorf, chief investment officer of Vontobel Quality Growth. “Now you’ve seen a bit of a mixed picture, which scrambles the monetary policy visibility.”
In currency markets, the pound touched the strongest level versus the euro since March amid continued optimism over the nation’s vaccine rollout. The dollar fluctuated against Group of 10 peers. Bitcoin retreated, paring its weekly gain to 5%. Commodities were broadly higher, with Brent futures trading near $65 a barrel.
Copper in London hit a fresh 8-year high as China’s traders returned from holiday with metals markets in a bullish mood. Meanwhile, the global oil market is grappling with a crisis caused by freezing temperatures in the U.S. More than 4 million barrels a day of output — almost 40% of the nation’s crude production — is now offline, according to traders and executives.