Last Updated: 4:00 PM EST
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Stock indices finished today’s trading session in the red. The Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 1.55%, 0.92%, and 0.96%, respectively. Indeed, rising bond yields continue to spook investors as the U.S. Treasury market faces new challenges.
The term premium, which is the extra return investors require for holding longer-term bonds instead of short-term debt, has jumped to its highest level since November 2023. This suggests investors are becoming more concerned about inflation and government debt, along with other long-term risks.
This increase in the term premium is happening because overall economic data shows that the economy is stronger than expected, which could lead traders to believe that the Federal Reserve will not lower interest rates as quickly as initially anticipated. Additionally, the close U.S. presidential race, especially if Republicans win, raises concerns about potential tax cuts and increased government spending, which could add more inflationary pressure.
In a separate development, the National Association of Realtors released its U.S. Existing Home Sales report, which measures the change in sales of existing residential buildings during the previous month on an annualized basis. Existing home sales came in at 3.84 million for the month of September, below the expected 3.88 million.
First Published: 4:48 AM EST
U.S. stock futures declined on Wednesday morning following a two-day losing streak for the S&P 500 index (SPX). Futures on the Nasdaq 100 (NDX), the S&P 500, and the Dow Jones Industrial Average (DJIA) were down 0.11%, 0.04%, and 0.29%, respectively, at 4:22 a.m. EST, October 23.
On Tuesday, the stock market experienced a volatile trading session as investor sentiment swung in response to a series of quarterly earnings reports from major companies. The Dow Jones and the S&P 500 indices edged slightly lower. However, the Nasdaq Composite closed higher for the fifth consecutive trading session.
Furthermore, the benchmark 10-year U.S. Treasury yield reached a new four-month high of over 4.2% on Tuesday, reflecting concerns about the U.S. economy and government deficits.
In significant after-market activity, McDonald’s (MCD) stock dropped 6% following the U.S. Centers for Disease Control (CDC) report of an E. coli outbreak associated with its Quarter Pounder burgers, which led to 10 hospitalizations and one death. Also, Starbucks (SBUX) was down 4% after the company revealed a decline in same-store sales and suspended its outlook for Fiscal 2025.
On the economic front, U.S. Existing Home Sales and the Federal Reserve’s Beige Book are set for release today. Investors should note that the Fed Beige Book provides a summary of economic conditions in each of the 12 Federal districts in the U.S.
Also, investors are focused on upcoming earnings reports of major companies including Tesla (TSLA), AT&T (T), Coca-Cola (KO), Boeing (BA), ServiceNow (NOW), T-Mobile (TMUS), and IBM (IBM).
Meanwhile, the U.S. 10-year treasury yield was up at the time of writing, floating near 4.2%. At the same time, WTI crude oil futures trended lower, hovering near $71.22 per barrel as of the last check.
Elsewhere, European markets opened flat today as investors assessed results from several companies, including L’Oreal (FR:OR) and Deutsche Bank (DE:DBK).
Asia Pacific Markets Traded Mixed on Wednesday
Asia-Pacific indices traded mixed today. Beijing’s stimulus measures continued to drive a rally in mainland Chinese stocks, resulting in four straight days of gains. Conversely, Japanese stocks fell as investors exercised caution ahead of the general election this weekend.
Hong Kong’s Hang Seng index was up 1.27%. Further, China’s Shenzhen Component and Shanghai Composite indices closed higher by 0.52% and 0.16%, respectively. However, Japan’s Nikkei 225 and Topix indices declined 0.8% and 0.55%, respectively.
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