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U.S. stocks recover from Tuesday’s shock, bond yields rise

PUBLISHED ON 2021-09-30 02:51:00 EST Yashasvini

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KEY POINTS-

-- Benchmark indices rose slightly after Tuesday’s rough performance

-- 10-year Treasury note rose 1.54% 

-- Brent crude was trading at $78.71 on Wednesday, down 0.5%

On Wednesday, the stock market recorded a cool down after investors engaged in a heated sell-off of technology stocks on Tuesday, followed by an unhinged rise in bond yields rose for the sixth consecutive day.

The Dow Jones Industrial Average was up about 235 points, or 0.7%, by Wednesday afternoon after the index fell 569 points on Tuesday to close at 34,299. The S&P 500 rose slightly by 0.5%, and the Nasdaq Composite gained 0.2%. Both the indices fell by 2 and 2.8% respectively, on Tuesday.

The 10-year Treasury note was yielding 1.54%, versus 1.534% at 3 PM ET on Tuesday.

Last week the U.S. Federal Reserve announced that it would cut down its massive bond-buying program but did not reveal a specific date. It kept the benchmark interest rates near zero and assured the market that the current pace of asset purchases would be maintained, but hinted that the interest rates could be hiked sooner than expected.

Tuesday’s tumbledown came in as bond yields jumped, putting massive pressure on technology stocks. Future profits become less valuable when bond yields are high. High-growth companies such as those in the technology sector predict huge profits in the future which is why they are the first to face a backlash when bond yields rise.

The Fed’s announcement along with a sharp increase in oil prices fueled investors' concerns on Tuesday as the Brent crude oil hit $80 a barrel for the first time in almost three years. It was trading at $78.71 on Wednesday, down 0.5% for the day.

Dollar Tree stock rose 16.5% after the company said it would be raising prices as part of a strategy to become more than a mere dollar store.

Tesla reported an increase in share price by 0.5% after analysts on Wall Street expect the company, to report its third-quarter earnings within a few days.

In European equities, the Stoxx Europe 600 rose slightly and closed up 0.6%, after recording its biggest percentage decline since July 19. Asian stocks were mostly lower across the board, with the Nikkei 225 ending down 2.1% the Shanghai Composite Index ended 1.8% lower and China’s CSI 300 closed 1% lower.

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