Wall Street slips as rising yields pressure some shares

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Wall Street slips as rising yields pressure some shares

Wall Street’s main indexes drifted lower in light trading volumes, as rising yields pressured some shares, while investors looked for a year-end boost from the so-called Santa Claus rally.

Yields on government bonds inched higher across the board on Thursday, with the yield on the benchmark 10-year note hitting its highest since early May at 4.64 per cent.

Among megacap stocks,

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.com slipped 0.3 per cent, while Meta Platforms shed 0.6 per cent.

Rate-sensitive real estate stocks were among the worst hit, down 0.4 per cent, while consumer discretionary fell 0.5 per cent.

“Now we’re at an inflection point on the Treasury yield, especially the 10-year … any move higher and it tends to create equity market weakness and that’s what I’m seeing this morning,” said George Cipolloni, portfolio manager at Penn Mutual Asset Management.

In early trading on Thursday, the Dow Jones Industrial Average fell 123.50 points, or 0.30 per cent, to 43,173.53, the S&P 500 lost 15.13 points, or 0.25 per cent, to 6,024.91 and the Nasdaq Composite lost 46.45 points, or 0.23 per cent, to 19,984.67.

Markets in Europe, London and parts of Asia were closed on Thursday.

The S&P 500 and the Nasdaq wrapped up Tuesday’s truncated session with a third straight day of gains, lifted by megacap and growth stocks.

Gains in Apple, Tesla, Alphabet,

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, Nvidia,

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and Meta Platforms accounted for more than half of the S&P 500’s 28.4 per cent total return this year, according to S&P Dow Jones Indices Senior Index Analyst Howard Silverblatt.

Without the Magnificent Seven stocks, the benchmark index’s total return would have been 13.2 per cent in 2024, Silverblatt added.

US stocks have hit a speed bump this month following an election-led rally in November as they contend with the Federal Reserve’s projection of fewer interest rate cuts in 2025.

The three main indexes have hit multiple record highs this year on hopes of a lower interest rate environment and the prospects of artificial intelligence boosting corporate profits.

However, investors are starting to question the sustainability of the rally due to stretched valuations and as megacaps continue to attract more investor funds.

Yet, investors are hoping for a typically strong finish in the final days of the year – called the “Santa Clause rally” – a pattern attributed to low liquidity, tax-loss harvesting and investing of year-end bonuses.

The S&P 500 has gained an average of 1.3 per cent in the last five trading days of December and the first two days of January since 1969, according to the Stock Trader’s Almanac.

A December without a Santa rally has been followed by a weaker-than-average year, data from LPL Financial going back to 1950 showed.

Meanwhile, a Labour Department report showed the number of new Americans filing for jobless benefits last week fell to 219,000, compared with the 224,000 expected by economists in a Reuters poll.

Cryptocurrency-related stocks were down after bitcoin fell over 3.0 per cent. Coinbase Global was off 1.4 per cent, while Riot Platforms and Mara Holdings shed over 2.4 per cent each.

Declining issues outnumbered advancers by a 3.08-to-1 ratio on the NYSE and by a 2.03-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and one new low while the Nasdaq Composite recorded 17 new highs and 24 new lows.

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