Wall Street supported as market shrug off rising yields and North Korea

  • The three main indices traded slightly higher on Wednesday despite a new high in the 10-year Treasury yield and North Korea threatening to cancel the June 12 meeting with US President Trump.
  • The US industrial production came in better than expected while the housing data is mixed. 

The three main indices in the United States closed higher on Wednesday. The S&P 500 gained 0.41% to 2,722.46 while the Dow Jones Industrial Average rose 0.25% to 24,768.93. The tech-heavy Nasdaq posted the best performances and gained 0.63% to end the day at 7,398.29. Gold is trading at around $1290.64 a troy ounce while crude oil WTI benchmark is at around 71.53 up 0.86% on Wednesday.

Investors decided to shrug off concerned about rising yields and geopolitical tensions with North Korea. 

The 10-year Treasury yield broke a new multi-year high reaching a high at 3.103% on Wednesday. The day earlier US stocks sold-off as yield broke strongly to the upside. In fact, on the prospect of higher interest rates in the near future, investor dumped stocks, bonds and the non-yielding gold to buy USD. 

Meanwhile, US President Trump and the North Korean Leader Kim Jong Un are scheduled to meet on June 12 in Singapore but it has been reported that North Korea is threatening to cancel the meeting if the United States insisted on the denuclearization. The market did not seem to care much.

On the macroeconomic front, US industrial production rose 0.7% in April, slightly above 0.6% forecast. The construction of new houses fell 3.7% in April while the annual rate of new homes built dropped to 1.289 million last month from a revised 1.336 million in March which was the highest since mid-2007.

“Recent market action reflects a balance between risk and reward for investors. On the positive side, there is still growth momentum and solid earnings. But these are counterbalanced with risks on policy issues, trade talks and geopolitics like North Korea,” commented Lisa Erickson at U.S. Bank Wealth Management.

Nasdaq Composite Index daily chart 

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