Wednesday, 17 October, 2018

Stocks give up an early gain; 10-year yield hits 3 percent

Traders work on the floor of the New York Stock Exchange in New York U.S Traders work on the floor of the New York Stock Exchange in New York U.S
Cristina Norman | 26 April, 2018, 12:53

Investors cheered the latest corporate earnings, sending the Dow up by 131 points at its session high. The S&P 500 fell 0.58 percent to 2,619.37 and the Nasdaq Composite dropped 0.61 percent to 6,964.33.

MISPRINT: Alphabet slid 5.3 percent to $1,017.05 after the company said ad revenue climbed, but expenses also rose.

"However, with USA 10-year treasury yields topping 3% for the first time since 2014, fears have been stoked over whether we will see investors shift assets out of stocks and into bonds". South Korea's Kospi lost 0.9 percent to 2,442.06. The investors sell American government securities because of expectations of rising inflation.

The U.S. equities fell sharply in the previous session. Meanwhile, interest rates jumped to levels not seen in years.

At 9:53 a.m. ET, the Dow Jones Industrial Average was down 131.4 points, or 0.55 percent, at 23,892.73. Caterpillar Chief Financial Officer Bradley Halverson's prediction that the first quarter would be "the high-water mark" for the firm's profits caused some concerns among traders.

Benchmark U.S. crude oil rose 30 cents to $68.35 a barrel in electronic trading on the New York Mercantile Exchange.

Wall Street limped into positive territory on Wednesday on optimism over a spate of upbeat earnings that was almost offset by jitters over rising US bond yields and corporate costs.

Investors are watchful about other companies raising such warnings, as inflation is picking up and the Federal Reserve is in no mood to put the brakes on its own rate-hike program.

Reuters data shows that analysts are now estimating 21.1 percent profit growth in the first quarter among the S&P 500 companies, compared with 18.6 percent growth rate at the start of the earnings season.

Bond prices fell. The yield on the 10-year Treasury went as high as 3 percent in early trading before slipping back to 2.99 percent.

Wall Street had cheered Caterpillar's results earlier in the day after the company had a strong first quarter and raised its forecasts for the year.

The Dow is down 438.81 points, or 1.8 percent.

CURRENCIES: The dollar edged up to 108.67 yen from 108.65 yen.

The S&P 500 index lost 44 points, or 1.7 percent, to 2,626. Brent crude, used to price global oils, fell 1.1 percent to $73.86 per barrel in London.

The S&P 500 is down 39.05 points, or 1.5 percent. The euro rose to $1.2244 from $1.2205.

One of the stocks leading the index higher was travel website Travelzoo (NASDAQ:TZOO) which surged nearly 21% to US$9.35 after first-quarter income from continuing operations nearly tripled to US$2.5mln.

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