Both the S&P 500 ETF (SPY) and the Nasdaq 100 ETF (QQQ) closed lower on Tuesday as long-term rates continued to rise amid elevated inflation expectations.
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News That Moved the Stock Market Today
- The 30-year Treasury yield rose 3.1 bps to 5.17%, its highest level since April 2007, while the 10-year yield jumped 4.2 bps to a 16-month high of 4.66%. Falling rate cut odds have also supported rising yields, with the odds of one rate cut by the end of the year dropping to 0.6% on the CME FedWatch tool.
- A Bank of America survey showed that 66% of fund managers expect the 30-year yield to exceed 6% over the next year.
- Higher yields are generally viewed as a negative for equities because investors are more likely to purchase bonds instead of stocks. In addition, higher yields lead to a higher discount rate, which reduces the present value of future earnings.
- Kevin Warsh is set to be sworn in to succeed Fed Chair Jerome Powell on Friday. Ahead of the ceremony, President Trump said he would allow Warsh to “let him do what he wants to do” with interest rates.
- Alphabet (GOOGL) closed in the red, despite the company announcing at its Google I/O conference that Gemini now has 900 million monthly users. Alphabet also announced major changes to its search engine.
- Melius Research analyst Ben Reitzes raised his Micron (MU) price target to $1,100 from $700 and his SanDisk (SNDK) target to $2,350 from $1,500.
- Nvidia (NVDA) is set to report its earnings after the market close on Wednesday. Polymarket traders are pricing in a 97% probability of an earnings beat.