Wall Street indexes started Wednesday, 29 May 2024, on the back foot as higher Treasury yields pressurised mega-cap stocks. Reuters reported that investor uncertainty about US Federal Reserve rate cuts motivated the movements.
Wall Street Experiences Midweek Lethargy As Treasury Yields Dampen Mega-caps
At the opening bell, the Dow Jones Industrial Average was down 0.35%, the S&P 500 0.51%, and the Nasdaq Composite 0.83%. Mega-caps, which include market leaders such as Apple Inc. (AAPL) and Nvidia Corporation (NVDA), slipped between 0.3% and 1.1%.
According to Reuters, the five-year note achieved a four-week record in the wake of a feeble “debt auction”. Analysts explain that bond yields follow the ebb and flow of interest rates, and increased rates push up the costs of personal and commercial financing. Data shows that the CBOE Volatility Index, a so-called “Wall Street fear gauge”, also attained a three-week high.
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In a historic first, the Nasdaq, characterised by its tech-laden stock lineup, closed Tuesday, 28 May 2024, above 17,000 points. Economists pointed out this feat is partly due to the financial performances of Nvidia and other listed microchip makers. The S&P 500’s Tuesday trading ended on a sluggish note in response to the US Federal Reserve’s hesitancy to decrease interest rates.
Investors kicked off the year’s trading with high hopes that US interest rates would be cut in March 2024. Those expectations were dashed in the face of stubborn inflation and hawkish outlooks from monetary policymakers. Reuters indicated that according to the CME FedWatch Tool, cuts may not happen until the end of this year.
