US: Stocks slide, hit by latest spike in bond yields
WALL Street stocks fell on Wednesday as US Treasury yields hit a multi-month peak, following fresh proof that price pressures are persisting.
The yield on the 10-year US Treasury note, a proxy for expectations of Federal Reserve monetary policy, struck four per cent for the first time since early November.
The surge came after the Institute for Supply Management’s (ISM) manufacturing index came in at 47.7 in February, a bit above the January level, but still in contraction territory.
The report showed a jump in the prices index to 51.3 per cent, up 6.8 percentage points, in a move that generated groans from investors who hope for an easing in Fed policy.
The ISM data, coupled with other recent inflation reports from Spain and Germany, do “not necessarily fit the narrative of the sharp move lower in inflation, which many were expecting,” said Angelo Kourkafas, investment strategist at Edward Jones.
The Dow Jones Industrial Average ended flat at 32,661.84.
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The broad-based S&P 500 shed 0.5 per cent to 3,951.39, while the tech-rich Nasdaq Composite Index dropped 0.7 per cent to 11,379.48.
Shares of home-improvement retailer Lowe’s fell 5.6 per cent after reporting lower comparable sales in the fourth quarter, while department store Kohl’s dipped 1.9 per cent as it reported a US$273 million loss during the period.
Covid-19 vaccine maker Novavax plunged around 26 per cent after it acknowledged that “substantial doubt exists” about its ability to continue operating.
The company was an early frontrunner in the global vaccine race, but fell behind after being hit by manufacturing and regulatory delays.
Eli Lilly climbed around 0.9 per cent as it announced it would cut the cost of its insulin by 70 per cent, a move applauded by President Joe Biden and other politicians that have criticised drugmakers.
However, the move is not expected to significantly dent drugmakers’ financial performance because much of the elevated pricing goes to rebates for insurers. AFP
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