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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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Dow down 0.11%, S&P 500 down 0.44%, Nasdaq down 0.58%
(Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, March 1 (Reuters) - U.S. stocks fell on
Wednesday as Treasury yields jumped after manufacturing data
indicated stubbornly high inflation, while comments from Federal
Reserve policymakers maintained a hawkish policy stance.
The yield on 10-year notes topped 4% for the
first time since November, reaching a high of 4.006%, 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 U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 9.4 basis
points at 4.891% after reaching 4.904%, its highest since 2007.
"Partly news and partly investors always like to look at a threshold, so with bonds going over 4% that is some kind of psychological barrier," said Melissa Brown, global head of applied research at Qontigo in New York. "The general news certainly hasn't been particularly conducive to strong stock markets."
The Dow Jones Industrial Average fell 36.09 points, or 0.11%, to 32,620.61, the S&P 500 lost 17.55 points, or 0.44%, to 3,952.6 and the Nasdaq Composite dropped 66.66 points, or 0.58%, to 11,388.89. Losses on the Dow were muted, as Caterpillar shares rose 3.30% after the construction equipment maker said it had reached a tentative deal with a union that represents workers at four of its facilities.
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%.
Further fueling concerns about central bank aggressiveness,
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 in an essay that while
a federal funds rate between 5% to 5.25% would be adequate, the
policy would have to remain tight "until well into 2024" until
inflation is clearly subsiding.
After a strong January, the main U.S. benchmarks stumbled in
February on growing expectations the Fed will increase rates
more than initially thought as segments of the economy such as
the labor market remain tight, while inflation has not ebbed as
quickly as anticipated.
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. Energy and materials sectors were among
the few winners in the session as commodity prices gained after
data showed China's manufacturing activity expanded at the
fastest pace in more than a decade as the country continues to
leave its COVID-19 restrictions behind.
Tesla Inc slipped 1.67% 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 tumbled 26.84% 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 advancing ones on the NYSE by a
1.42-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favored decliners.
The S&P 500 posted 8 new 52-week highs and 13 new lows; the
Nasdaq Composite recorded 70 new highs and 102 new lows.
(Reporting by Chuck Mikolajczak; Editing by Aurora Ellis)
