Treasury Yields Push US Stocks Down Amid Strong Economy
US stocks took another hit on Thursday as pressure from the bond market continued to weigh them down. The S&P 500 fell 0.4% and was on track for its third straight decline, while the Dow Jones Industrial Average dropped 124 points or 0.2%. The Nasdaq composite also slid 0.6% lower.
The main culprit behind this slump is higher yields in the bond market, which make borrowing more expensive for everyone. This includes individuals trying to keep up with inflation, businesses wanting to invest in AI technology, and even the US government struggling to cover its massive spending gap.
Yields on 10-year Treasuries briefly reached 5.15% before pulling back to 5.09%, down from 5.11% late Wednesday. This is roughly the same level as in 2007, and significantly higher than its pre-Iran war level of 3.97%. The rising Treasury yields are also pushing up oil prices, with Brent crude hitting $99.88 after a 1.8% increase.
The price for a gallon of regular gasoline has now reached an average of $4.48 from less than $4.10 a month ago and $3.16 a year earlier, according to AAA. The strong US economy, which is growing at its fastest pace in years, continues to support higher yields. A preliminary report showed US business activity increasing quickly, while corporate America's costs are also rising rapidly.