Stocks slip as rising yields offset Nvidia rally

by Jonathan Adams

The Dow Jones Industrial Average dropped 411.32 points, or 1.06%, to 38,441.54, the S&P 500 slipped 0.74% to 5,266.95, and the Nasdaq Composite slipped 0.58% to 16,920.58

Stocks slipped Wednesday as pressure from rising Treasury yields offset a continued rally in AI company Nvidia.

The Dow Jones Industrial Average (DJIA) dropped 411.32 points, or 1.06%, to 38,441.54. The S&P 500 slipped 0.74% to 5,266.95, marking its first negative session of the last three. The Nasdaq Composite slipped 0.58% to 16,920.58, as Nvidia’s advance somewhat reduced losses for the technology-heavy index.

Nvidia jumped 0.8%, reversing an early loss of 2.6%. The megacap tech company has gained every trading session since issuing its blockbuster earnings report last Wednesday. Since then, the stock has soared nearly 21%.

All 11 sectors that comprise the broad S&P 500 pulled back, underlining the range of market weakness. Over 440 stocks in the index were lower on the day.

In all, 27 of the 30 stocks in the DJIA dropped. Insurance provider UnitedHealth led the blue-chip average down with a decline of over 3% after management commentary around its Medicaid business. Other stocks tied to the federal health insurance program declined, including Molina Healthcare, Humana and Elevance Health.

Wednesday’s move lower comes as the 10-year Treasury note yield rose for a second day, last trading above 4.6%. The benchmark yield rose to troublesome levels for stock investors after a Treasury Department auction on Tuesday that was met with weak demand. Higher yields can lower the multiples investors are willing to pay for stocks, raise borrowing costs, hurt consumer spending and make Treasury bills and money market funds more attractive.

Today is really all about interest rates, said Adam Turnquist, chief technical strategist at LPL Financial, adding that the 10-year and 2-year yields have reached “uncomfortable levels.” That all is creating some angst among investors.

The advances arrive even as traders have lowered their expectations for Fed rate reductions. Indeed, fed funds futures trading data indicates a nearly 54% probability that rates will hold steady in September, as per the CME FedWatch Tool.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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