Major U.S. Stock Indexes Swing Both Ways as Investors Adjust to Rate IncreasesTraders returned from Monday’s Columbus Day holiday by driving the yield on the benchmark 10-year Treasury note above 3.25 percent in early trading, returning to its highest level since 2011. The yield on the 30-year Treasury bond rose above 3.43 percent, its highest level since 2014.
Asian stock markets are rebounding on Wednesday, reflecting the price action seen on Wall Street the previous session. Low volume and low volatility, however, indicate investors are being cautious.
U.S. equity indexes finished mostly lower on Tuesday after posting a volatile two-sided session. Investors were mostly worried about rapidly rising interest rates ahead of the start of third quarter earnings season.
In the cash market, the benchmark S&P 500 Index settled at 2880.34, down 4.09 or -0.14%. The blue chip Dow Jones Industrial Average finished at 26430.57, down 56.21 or -0.21% and the tech-driven NASDAQ Composite ended at 7738.37, up 2.42 or +0.03%.
Investor uncertainty helped the major indexes swing between positive and negative territory several times throughout the session. When it finally ended, the NASDAQ snapped a three-day losing streak. It was helped by gains in Facebook and Amazon which rose 0.40 percent and 0.30 percent respectively. Netflix was up 1.9 percent and Apple added 1.4 percent.
U.S. Treasury Markets
U.S. government debt investors continued to ride the wave fueled by last week’s hawkish comments from U.S. Federal Reserve Chairman Jerome Powell.
Traders returned from Monday’s Columbus Day holiday by driving the yield on the benchmark 10-year Treasury note above 3.25 percent in early trading, returning to its highest level since 2011. The yield on the 30-year Treasury bond rose above 3.43 percent, its highest level since 2014.
The 10-year finished the session at 3.21 percent and the 30-year at 3.375.
U.S. Economic Data
It was another light day on Tuesday with the NFIB Small Business Index coming in at 107.9, below the 108.9 forecast. The IBD/TIPP Economic Optimism reading was 57.8, well above the 54.6 estimate.
The National Federation of Independent Business (NFIB) optimism index fell 0.9 points in September to a seasonally adjusted level of 107.9.
According to the report, six index components, three gained, and one was unchanged. Job creation, capital spending, and actual sales all rose in September.
“This is the longest streak of small business optimism in history, evidence that tax cuts and regulatory rollbacks are paying off for the economy as a whole,” NFIB President Juanita Duggan said in a statement. “Our members say that business is booming and prospects continue to look bright.”
According to the IBD/TIPP Economic Optimism survey, Americans felt better about their personal finances at the start of October than at any time in the 18-plus years of the poll. Trump tariffs also got a vote of confidence as support for federal economic policies hit the highest level since 2005.