Wall Street Close: Trades mixed as strong T-bond yields probe bulls
|- Wall Street benchmarks closed mixed amid Nasdaq’s 0.01% drop versus mild gains of DJI, S&P 500.
- Chatters over US President Joe Biden’s readiness for $6.0 trillion budget, upbeat data battle strong Treasury yields.
- US Treasury Secretary Yellen backs Fedspeak rejecting reflation fears to be permanent.
- Apple, Microsoft dropped amid bond selling, cautious sentiment ahead of US Core PCE Price Index also probed the bulls.
Thursday turned out to be another mildly positive day for the US equity benchmarks, except for Nasdaq, as traders weighed multiple risk-on catalysts and data versus the US Treasury yields. Also testing the market sentiment was trader’s wait for today’s US Personal Consumption Expenditure (PCE) Price Index data for April.
US President Joe Biden’s readiness for a $6.0 trillion budget, per the New York Times (NYT), seems to propel the market mood of late. Also on the positive side were comments from US Treasury Secretary Janet Yellen, the ex-Fed Chair, suggesting that the reflation risk is temporary. Furthermore, the confirmation of upbeat US Q1 GDP, strong Durable Goods Orders and the lowest Weekly Jobless Claims since mid-March 2020 also increased optimism.
Against this backdrop, Dow Jones Industrial Average (DJI) gained 141.59 points, or 0.40%, to close at 34,464.64 whereas the S&P 500 came in second with 0.12% daily gains, up 4.89 points, while closing around 4,200. However, the Nasdaq bucked the trend with 4.89 points of downside to 13,736.28.
To be stock-specific, Apple and Microsoft were the major laggards and weighed down the tech-heavy Nasdaq whereas financial, industrials and consumer discretionary stocks backed DJI and S&P 500.
The US 10-year Treasury yields rose for the second consecutive day, up 3.3 basis points (bps), to regain a 1.60% level.
Even as the bond selling stops equity bulls, also to gold prices, market sentiment remains firm ahead of the crucial US Core PCE Price Index data for April, expected 2.9% versus 1.8% YoY previous readouts. Should the Fed’s preferred gauge of inflation reject the recent push from the Fed and Treasury Secretary Yellen, equities are likely to witness selling pressure.
Read: US PCE inflation preview: Gold remains key asset to watch
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