Global Markets React to Hawkish Reports; US Treasury Yields Surge, Stocks Post Losses

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The S&P 500 Index concluded Thursday with a -0.62% decline, the Dow Jones Industrials Index fell -0.51%, and the Nasdaq 100 Index closed down -0.37%. The stock market experienced moderate losses amid a rise in T-note yields, propelled by the stronger-than-anticipated US Sep CPI report. Furthermore, weekly US initial unemployment claims remaining unchanged, contrary to expectations of a slight increase, contributed to the hawkish sentiment impacting Fed policy. The day’s reports sustained the possibility of an additional Fed rate hike this year.

There was additional pressure on the market in the afternoon as T-note yields climbed further following weak demand for the Treasury’s $20 billion 30-year T-bond auction. Concerns over the potential expansion of the conflict between Israel and Hamas in the Middle East also weighed on stock market sentiment, triggered by reports of Israeli airstrikes on major airports in Syria.

US Sep CPI rose +3.7% year-over-year (y/y), in line with August and surpassing the anticipated decline to +3.6% y/y. Meanwhile, Sep CPI excluding food and energy moderated to 4.1% y/y from +4.3% y/y in August, meeting expectations and marking the smallest increase in two years.

The article further discusses how overseas stock markets settled mixed, with the Euro Stoxx 50 closing down -0.06%, China’s Shanghai Composite Index closing up +0.94%, and Japan’s Nikkei 225 finishing the day up +1.75%. It also highlights the performance of notable companies such as Hormel Foods, Homebuilding stocks, Keurig Dr Pepper, Boeing, Atlassian, Commercial Metals, Ford Motor, Jack Henry & Associates, Fastenal, Walgreens Boots Alliance, KLA Corp, Broadcom, Lam Research, Applied Materials, ASML Holding NV, Adobe, Albemarle, CME Group, and Target.

The 10-year T-note yield ended the day at 4.703%, marking an increase of +14.5 basis points, rebounding from a 1.5-week low earlier. The article explains how T-notes rallied from their lows due to safe-haven buying of government debt and Boston Fed President Collins’ comments signaling a preference for a pause in Fed rate hikes.