Wall Street stocks were in the red after the opening bell on Friday after the Nasdaq Composite recorded its worst session since October amid rising bond yields.
As of 1535 GMT, the Dow Jones Industrial Average was down 1.43% at 30,953.07, while the S&P 500 was 0.93% weaker at 3,793.81 and the Nasdaq Composite started out the session 0.67% softer at 13,031.10.
The Dow Jones opened 448.94 points lower on Friday, extending heavy losses recorded in the previous session as rising interest saw indices retreat.
A sudden and pronounced rise in bond yields was in focus again on Friday, with the rate on the US 10-year Treasury note briefly rising as high as 1.6% yesterday before dropping back down to around 1.52% – its highest level since last February.
Markets.com’s Neil Wilson said: “Markets are now starting to price for rate hikes far sooner than the Fed is indicating it will act. It’s not that rates are particularly high, it’s more the pace of the move taking frothy equity markets off guard.
“Valuations are stretched, so richly valued stocks are easily moved by these kinds of gyrations in the bond market. Whilst investors had been reasonably comfortable with a rising tide for rates, this sudden lurch higher requires repricing.”
Also drawing an amount of investor attention was news that Democrats had suffered a setback overnight in their plans to move ahead with President Joe Biden’s $1.9trn stimulus package after Senate parliamentarian Elizabeth MacDonough said lawmakers could not include a $15.0 per hour minimum wage hike in the bill.
On the macro front, Americans splashed out at the start of 2020 as government stimulus checks began arriving in their mailboxes.
According to the Department of Commerce, in seasonally adjusted terms US personal income growth was boosted to a month-on-month gain of 10.0% in January, which dwarfed the 0.6% rise registered in December. Economists correctly anticipated that jump, but not the 2.0% surge in personal consumption that followed.
Elsewhere, the Institute of Supply Management’s Chicago purchasing managers’ index dropped to 59.5 in February from 63.8 in January, a worse than expectations for a print of 61.1, indicating that US economic activity was continuing to expand at a softer pace.
Lastly, consumer sentiment fell to a six-month low in February as lawmakers remained unable to pass another round of Covid-19 stimulus relief, with the University of Michigan’s final consumer sentiment index hitting 76.8, down from 79 in January but slightly better than the preliminary print of 76.2.
In the corporate space, Foot Locker posted a decline in fourth-quarter net income to $123.0m and a 2.7% drop in same-store sales, while AMC Networks posted a big profit and revenue beat and Draftkings reported a beat on revenues amid an increase in paying customers.
