The S&P 500 was 0.6 per cent lower in afternoon trading and falling further from its record set last week. It’s trimming its gains for May, which had been on track to be its best month in six, and nearly 90 per cent of the stocks in the index are falling.The Dow Jones was down 1 per cent and the Nasdaq composite was 0.4 per cent lower a day after setting its latest all-time high. The Australian sharemarket is set to retreat, with futures at 5.12am AEST pointing to a fall of 46 points, or 0.
The 10-year yield is still down for the month, but it’s been creeping higher since dropping below 4.40 per cent in the middle of May.Higher Treasury yields hurt prices for all kinds of investments, and they can pack a particularly hard punch on stocks of utility companies. When bonds pay more in interest, they can peel away income-seeking investors who might otherwise buy those stocks for their relatively big dividends. Utilities in the S&P 500 fell 1.
The Fed is trying to pull off the balancing act of grinding down on the economy just enough through high interest rates to get inflation fully under control, but not so much that it leads to widespread layoffs. The US stock market has been continuing to set records despite worries about interest rates staying high in part because stocks related to artificial-intelligence technology keep rising. Nvidia’s latest blowout profit report helped drive the frenzy even higher, but momentum can’t last forever. Its stock fell in morning trading before flipping to a gain of 1.1 per cent, which would be its weakest since its profit report a week ago.