Published: Wed, May 16, 2018
Finance | By Loren Pratt

United States stocks close lower amid rising Treasury yield

United States stocks close lower amid rising Treasury yield

Stocks closed lower Tuesday, breaking an eight-day winning streak for the Dow Jones industrial average.

The broad sell-off followed a slide in bond prices, which sent the 10-year Treasury yield to its highest level in nearly seven years.

That paves the way for higher borrowing costs on mortgages.

The prospect of higher mortgage rates weighed on home builders, while the rise in bond yields sent stocks that pay high dividends lower.

An afternoon recap of the day's most important business news, delivered weekdays.

KEEPING SCORE: The S&P 500 index fell 25 points, or 1 percent, to 2,704 as of 3:30 p.m.

The Dow Jones Industrial Average lost 193 points, or 0.78 percent, to 24,706.41.

The Nasdaq fell 0.8 percent, to 7,351.63. The Russell 2000 index of smaller-company stocks gave up 1 point, or 0.1 percent, to 1,598.

THE QUOTE: "There's a number of data releases that will grab traders' attention today and could determine whether we see an early rebound in stock markets".

Banks, which stand to prosper because of higher interest rates on loans, bucked the downward trend.

Banks bucked the downward trend Tuesday and rose along with bond yields.

The Federal Reserve has signaled it will raise rates twice more this year, after having done so in March, and most economists foresee the next increase in June.

"A little bit of today's jitters are related to a hangover to yesterday's wrongly placed exuberance that a trade deal was imminent, and the reality is we are in for a long slugfest between the USA and China", said Jon Mackay, investment strategist at Schroders North America in NY. Small-company stocks also rose. Germany's DAX fell 0.1 percent after new data showed the country's economy slowed in the first quarter.

HIT TO HOUSING: Homebuilders slumped amid expectations that higher mortgage rates may hurt home sales. The VIX Volatility Index was higher at 14.57 with a gain of 1.64 points or 12.68%. Ulta Beauty added 1.1 percent to $249.64.

Stocks are opening moderately higher on Wall Street, led by gains in technology, health care and energy companies. Brent crude, used to price worldwide oil, gained 77 cents to $79.00 a barrel in London. Soon-to-be NY Fed President Williams noted that "inflation has just barely reached our 2 percent goal" and said that he thought the chances of two or three additional hikes this year were reasonably balanced. Nvidia fell 4.4 percent to $244.13.

CURRENCIES: The dollar rose to 110.38 yen from 109.66 yen late Monday. Silver dropped 38 cents, or 2.3 percent, to $16.27 an ounce.

In Asia, Japan's benchmark Nikkei 225 edged down 0.2 percent. South Korea's Kospi slipped 0.7 percent.

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