Agencies
More swings in the bond market are rattling stock markets around the world on Thursday and offsetting optimism that the artificial-intelligence industry can keep climbing.
The S&P 500 slipped 0.1 percent after swinging between earlier gains and losses and may be heading toward its seventh drop in the last eight days. The Dow Jones Industrial Average was down 188 points, or 0.4 percent as of 10:45 am eastern time, and the Nasdaq composite was virtually unchanged.
The losses were sharper in Europe, where bond yields saw a significant jump overnight. Stock indexes tumbled 1.7 percent in London and 1.6 percent in Paris after the yield on the 10-year UK government bond swung as high as 5.53 percent before falling to 5.37 percent and then charging upward again.
High yields slow the overall economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments. Yields are on the rise for a range of reasons, including worries about high inflation and oil prices, signals that the US economy remains solid and governments’ insistence to continue to spend much more money than they bring in.
Those worries don’t look to be going away anytime soon, and oil prices climbed again Thursday to keep the pressure up on inflation. The price for a barrel of Brent crude climbed 2.8 percent to $100.76, continuing its yo-yoing on uncertainty about when the war with Iran will allow the global oil industry to return to normal. Further reports also signaled the U.S. economy is powering through its many challenges. Fewer U.S. workers applied for unemployment benefits last week, which could mean fewer layoffs. That followed a report on Wednesday that said the US economy’s overall growth was even stronger in the spring than earlier thought.
A separate report on Thursday said growth for US manufacturing also continued in September. Potentially more concerning in that report from the Institute for Supply Management was that increases in prices accelerated, which could mean further pressure inflation.
The yield on the 10-year Treasury briefly neared 5.34 percent following the manufacturing report, before pulling back to 5.29 percent, where it was late Wednesday. It’s near its highest level since 2002, and it’s up from less than 5 percent just last week and from less than 4 percent before the war with Iran began. High yields can hurt real-estate owners in particular. Not only do they raise the cost of borrowing, they can also make investors looking for income leave real-estate stocks and their dividends for bonds. Real-estate stocks in the S&P 500 fell 0.8 percent for one of the larger losses in the index. BXP, which owns office buildings around the country, sank 1.7 percent.
Helping to limit Wall Street’s losses was strength for technology stocks after Micron Technology delivered a stronger profit report for the latest quarter than analysts expected.
The maker of memory chips for computers said growth is strengthening, and it gave forecasts for upcoming profit and revenue that topped analysts’ estimates. CEO Sanjay Mehrotra said it’s benefiting from the AI boom, which is driving demand for memory. Micron’s stock fell 1.7 percent, which some analysts attributed to how much its stock had already jumped before the profit report.
It came into the day with a gain of more than 270 percent for the year so far, towering over the less than 12 percent rise for the overall S&P 500.But other AI-related stocks benefited from Micron’s optimism about continued demand related to AI. Nvidia rose 1 percent , and Applied Materials added 4.3 percent. Outside of tech, Accenture leaped 20.3 percent after the consulting and services company reported stronger profit for the latest quarter than analysts expected.
