S&P 500; US Indexes Fundamental Daily Forecast – Investors Booking Profits After Nearly Two-Week Rally

U.S. stocks are trading lower at the mid-session on Thursday with investors using rising interest rates and a disappointing forecast from a major Asian chipmaker as excuses to book profits after posting a more than two week rally.

In the cash market at 1528 GMT, the benchmark S&P 500 Index is trading 2691.17, down 17.47 or -0.64%. The blue chip Dow Jones Industrial Average is at 24676.05, down 72.02 or -0.29% and the tech-driven NASDAQ Composite is at 7236.59, down 58.65 or -0.80%.

Investors are paying close attention to rising interest rates today, as the 10-year Treasury note yield broke above 2.9 percent. Earlier in the year, the 10-year traded near this level, igniting a steep correction. Investors feel that rising rates mean higher inflation is coming and this would weigh on future earnings.

Technology investors are responding to the news that Taiwan Semiconductor Manufacturing (TMSC) expects second-quarter revenue to range between $7.8 billion and $7.9 billion, well below a Wall Street Consensus estimate of $8.88 billion.

The news from TMSC is putting pressure on other major players in the technology sector including shares of Apple which fell 2 percent and shares of Nvidia, Micron and Advanced Micro Devices which are all down nearly 1 percent.

In other news, Weekly U.S. Jobless Claims totaled 232,000, slightly more than expected. The Philadelphia Fed Index reached 23.2 in April, higher than the forecast of 20.8.

Forecast

There isn’t really any bad news in the market today, but investors feel the need to book profits and make adjustments in response to the rising U.S. Treasury yields. This makes sense because Treasurys compete with stocks for investor money. Those stock players seeking a higher yield and a government guarantee are moving money out of stocks and into the highest and safest yield.

Rising commodity prices may have helped underpin stocks on Wednesday, but they may be weighing on the stock market today. This is because higher commodity prices tend to drive up inflation and high inflation eats into company profits. Not only will some companies have to pay more for raw materials, but borrowing costs will also rise.

These are the key factors putting pressure on stocks today.