US STOCKS-S&P 500, Nasdaq slip as rising yields spook investors

Kitco Media
By Reuters
Published:
Updated:
Reuters
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Two-year Treasury yield jumps to 2007 high

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Novavax slumps on going concern worries

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Tesla slips ahead of investor day



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Indexes: Dow up 0.11%, S&P slips 0.19%, Nasdaq down 0.28%

(Updates prices, adds comment) By Sruthi Shankar and Shristi Achar A March 1 (Reuters) - The S&P 500 and Nasdaq indexes fell on Wednesday as Treasury yields surged after manufacturing data pointed to persistent price pressures, while comments from Federal Reserve policymakers backed a hawkish policy stance for a longer period. The yield on 10-year notes topped 4% for the first time since November after the Institute for Supply Management's survey showed U.S. manufacturing contracted in February and prices for raw materials increased last month. The two-year yield , which closely tracks short-term interest rate expectations, rose to 4.9%, its highest level since 2007. "The 10-year Treasury is up and that is just a natural headwind to equity valuations," said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management. "You also got a tick up in the ISM prices paid, which means that prices generally are rising now for manufacturing. It just means that the Federal Reserve is likely to push further into restrictive territory with their policy and stay there longer." Traders of futures tied to the Fed's policy rate added to bets that the U.S. central bank will raise its benchmark rate to a range of 5.5%-5.75% by September, from the current range of 4.5%-4.75%. Adding to worries, Minneapolis Fed President Neel Kashkari, a voter in the rate-setting committee in 2023, said he is "open-minded" on either a 25 basis point or a 50 basis point rate hike in March. Atlanta Fed President Raphael Bostic said monetary policy will have to remain tight "until well into 2024". The main U.S. benchmarks had ended February with losses on expectations that the Fed will increase rates more than initially thought on signs of resilience in the economy. U.S. monthly payrolls and consumer prices data in the coming days will further help investors gauge the path of rates ahead of the March 21-22 meeting, when the Fed is largely seen hiking rates by 25 basis points. While seven of the 11 major S&P 500 sectors fell, energy and material indexes climbed nearly 2% as commodity prices rallied after data showed China's manufacturing activity expanded at the fastest pace in more than a decade. At 12:13 p.m. ET, the S&P 500 slipped 7.52 points, or 0.19%, to 3,962.63 and the Nasdaq Composite fell 31.85 points, or 0.28% to 11,423.69. The Dow Jones Industrial Average , however, rose 34.76 points, or 0.11%, to 32,691.46, boosted by Caterpillar Inc after the construction equipment maker said it had reached a tentative agreement with a labor union, averting a possible strike.


Tesla Inc slipped 2.4% ahead of its investor day event. The electric automaker is readying a production revamp of its top-selling Model Y, Reuters reported, citing people familiar with the plan. Novavax Inc slumped 26.4% after the COVID-19 vaccine maker raised doubts about its ability to remain in business and announced plans to slash spending as it prepares for a fall vaccination campaign. Declining issues outnumbered advancers for a 1.13-to-1 ratio on the NYSE and 1.07-to-1 ratio on the Nasdaq. The S&P index recorded eight new 52-week highs and 12 new lows, while the Nasdaq recorded 63 new highs and 88 new lows. (Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila)

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