Stocks Tumble as Yields Surge to Multi-Year Highs

Stock markets fell across the board on Wednesday as Treasury yields surged to multi-year highs. The jump in yields was driven by a hawkish speech from Fed Governor Barr and a strong composite flash PMI reading, which sent expectations of future rate hikes higher.

The 10-year Treasury yield rose by around 14 basis points to 5.11%, its highest close since July 2007, while the 2-year yield jumped by 14 basis points to 4.89%. The 5-year Treasury yield broke above 5% for the first time since 2007.

The rise in yields weighed heavily on equities, with all four major indexes falling. The Russell 2000 led the declines, dropping by 1.8%, while the Nasdaq fell 1.1%. The S&P 500 and Dow Jones Industrial Average declined by 0.75% and 0.68%, respectively.

Brett Ewing, chief market strategist at First Franklin Financial Services, predicted that the S&P 500 could reach 8,200 before the year is over. Emma Moriarty at CG Asset Management noted that risk sentiment in equities would be influenced by expectations of interest rates and inflation, as well as movements in oil prices.