Stocks have been getting walloped by interest rate woes lately, yesterday included. Treasury prices are falling further in the early going today.
Still, gold and silver are mixed and stocks are flattish. Crude oil is a bit higher, too, while the dollar is lower. Those could be signs the selloff is due for a pause.
On the news front...
The bond market is front and center these days, with surging interest rates grabbing headlines – and the stock market’s attention! As you can see in this chart, the yield on the benchmark 10-year Treasury Note hit 4.28% yesterday. That put it at its highest since June 2008. Then it climbed again this morning to as high as 4.42%.
Rising yields aren’t just a US phenomenon, either. The benchmark yield in the UK hit a 15-year high this week, while the benchmark yield in Germany rose to its highest since 2011. Emerging markets are getting rocked even harder, with yields in countries like Russia and Argentina soaring amid currency market turmoil and capital flight.
Some of the rally stems from better-than-expected economic news and fading recession fears. That’s “good.” But the rise also stems from fears the Federal Reserve may have to jump back in and hike rates further. That’s “bad.”
In any event, rate-sensitive stock market sectors are under pressure. The Utilities Select Sector SPDR Fund (XLU) is down almost 9% year-to-date, while the Real Estate Select Sector SPDR Fund (XLRE) is flat. Both badly trail the SPDR S&P 500 ETF (SPY), which is up around 16%.
As for earnings, Walmart (WMT) trounced Q2 estimates with a 6.3% rise in same-store sales. The mega-retailer also raised its full-year, per-share profit forecast to a range of $6.36 to $6.46 from $6.10 to $6.20 previously.
