NEW YORK: The S&P 500 fell to a two-week low on Thursday as a global bond selloff, fueled by higher oil prices and inflation concerns, pushed US Treasury yields to multi-decade highs and overshadowed a rally in software stocks.
Markets came under renewed pressure as longer-dated Treasury yields rose after ISM data showed a jump in manufacturing input prices, stoking inflation concerns.
The benchmark 10-year Treasury note touched 5.3445 percent, its highest since April 2002, after posting its biggest quarterly advance since 1994.
“The ISM number came out and, in particular, the prices paid component of that number was higher than expected. It’s a very inflationary number; people get nervous about that, and it caused bond yields to go even higher,” said Joe Saluzzi, co-founder of equity trading at Themis Trading.
Oil prices added to inflation worries, with Brent crude jumping USD3 to USD101.76 a barrel after China suspended fuel exports, threatening to tighten already constrained markets.
The selloff followed a rocky September for equities, with the S&P 500 and Dow posting declines in a historically weak month for stocks, while AI enthusiasm lifted the Nasdaq.
Surging bond yields are putting lofty stock valuations under fresh scrutiny, raising the stakes for corporate earnings as persistent inflation keeps borrowing costs elevated.
Rate-sensitive stocks fell, with housing down 1.1 percent and banks shedding 1.3 percent. Bond proxies real estate, utilities and consumer staples sector indexes were all in the red.
The Cboe VIX index, seen as Wall Street’s fear gauge, climbed to a two-week high and was last at 17.07 points.
At 12:11 p.m., the Dow Jones Industrial Average fell 153.69 points, or 0.30 percent, to 50,752.36, the S&P 500 lost 13.00 points, or 0.17 percent, to 7,638.49 and the Nasdaq Composite lost 48.98 points, or 0.18 percent, to 26,812.08.
Technology was a pocket of strength, with software shares rallying on results from Accenture. The IT consulting firm’s shares surged 18 percent after forecasting full-year revenue growth above estimates. Rival Cognizant climbed 6.4 percent.
The S&P 500 software index firmed 0.8 percent to its highest since November, outperforming the broader tech index’s 0.1 percent advance.
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