Published: Wed, May 16, 2018
Business | By Pearl Harrison

Spiking bond yields slam stock market winning streak

Spiking bond yields slam stock market winning streak

That paves the way for higher borrowing costs on mortgages and other loans. Homebuilders fell sharply as a result. The S&P 500 closed at 2,711.45 for a loss of -18.68 points or -0.68%. The Nasdaq composite dropped 78 points, or 1.1 percent, to 7,332.

The Dow lost 193 points, or 0.8 percent, to 24,706.

Home Depot Inc (HD.N) shares slipped 1.6 percent after the home improvement retailer missed sales forecasts as the long winter put a damper on demand for spring products. Among the worst performers on the S&P 500, Agilent Technologies (A) shares dropped almost 10% after the maker of medical instruments and other equipment posted quarterly earnings that matched forecasts late Monday. Sectors leading losses for the day included real estate, health care and technology.

Small-company stocks held up better than the rest of the market. Bond yields tend to rise when investors expect faster economic growth and higher inflation. Small-company stocks also rose.

Oil prices ended a shade firmer after retreating from multi-year highs hit early in the day on Tuesday, supported by concerns that USA sanctions on Iran are likely to restrict crude exports from one of the biggest producers in the Middle East. At 3.08% earlier today, it was the highest yield since July 2011.

Markets focused early on economic reports with sales at USA retailers rising for a second straight month in April.

U.S. retail sales increased at a moderate 0.3 per cent in April as rising gasoline prices took a bite out of discretionary spending, according to the U.S. Commerce Department. Nvidia fell 4.4 percent to $244.13. The Shanghai Composite index dropped 0.3 percent to 3,183.28 and shares in Southeast Asia were lower while Taiwan advanced.

Stocks are opening moderately lower across the board on Wall Street, led by declines in technology and consumer-focused companies.

A surge in USA government bond yields to their highest level in nearly 7 years sent Wall Street shares sliding on Tuesday after strong retail sales data stoked inflation concerns and investors fretted about looming trade talks between the United States and China. That yield is used to set interest rates on mortgages and other kinds of loans.

KEEPING SCORE: Japan's Nikkei 225 stock index lost 0.2 percent to 22,766.69 and the Kospi in South Korea edged less than 0.1 percent lower to 2,457.88. Gold fell $27.90, or 2.1 percent, to $1,290.30 an ounce.

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