October 4, 2018 / 8:34 PM / 2 months ago

US STOCKS-Wall Street stumbles as bond yield climb continues

    * Financials rise as 10-year yields hit 7-year high
    * Worst day for S&P and Nasdaq since June 25
    * Dow down 0.75 pct, S&P 500 down 0.82 pct, Nasdaq down 1.81
pct

 (Updates to market close)
    By Chuck Mikolajczak
    NEW YORK, Oct 4 (Reuters) - Wall Street stocks stumbled on
Thursday as U.S. Treasury yields continued their ascent to
multi-year highs on the latest round of strong economic data,
building concerns for an acceleration of inflation.
    The Dow suffered its first decline in six sessions, while
both the S&P and Nasdaq had their worst day since June 25. 
    The yield on the benchmark 10-year Treasury note
climbed to a seven-year high of 3.232 percent, marking its
largest daily jump since the 2016 U.S. presidential election.
Data on jobless claims and factory orders were the latest in a
round of strong economic reports this week, putting the focus
squarely on Friday's payrolls report for September.

    
 
 
 
    "The follow-through on the Treasury rates today, actually
the follow-through worldwide on Treasuries, has a big part to do
with this," said JJ Kinahan, chief market strategist at TD
Ameritrade in Chicago. 
    "And just in general, so many of these sectors have been so
hot it may be time to take a little break," he added.
    Financials were one of the few bright spots on Wall
Street, rising 0.71 percent. Banks, which typically
benefit from rising rates, gained 0.81 percent. 
    Thursday's data, which showed jobless claims fell to a near
49-year low, followed comments this week from several Federal
Reserve officials, including Chairman Jerome Powell, that
underscored the strength of the economy.

    The Dow Jones Industrial Average fell 200.91 points,
or 0.75 percent, to 26,627.48, the S&P 500 lost 23.9
points, or 0.82 percent, to 2,901.61 and the Nasdaq Composite
 dropped 145.58 points, or 1.81 percent, to 7,879.51.  
    Equities have struggled over the past year when interest
rates climbed faster than investors were anticipating.  
    
 
 
 
    Among the biggest drags on the S&P were the so-called FANG
group of stocks, which were among shares that helped propel the
Nasdaq to its recent record high. Google parent Alphabet Inc
 sank 2.8 percent and Netflix Inc slumped 3.6
percent.
    Apple Inc lost 1.76 percent, and Amazon.com Inc,
shed 2.22 percent. Both companies denied a Bloomberg report
their systems had been infiltrated by malicious computer chips
inserted by Chinese intelligence.
    "Investors are concerned. Are more parts of the global
technology supply chain hacked?" said Michael O’Rourke, chief
market strategist at JonesTrading in Greenwich, Connecticut. 
    Market participants will be looking closely for signs of
wage growth in Friday's jobs number, especially in light of
anecdotal indications of rising wages such as Amazon's raising
its minimum wage to $15 earlier this week.
    Despite the pullback, U.S. stocks remain near record levels,
raising some concern about valuations with the quarterly
earnings reporting season about to begin.
    Among gainers, Constellation Brands rose 5.38
percent after the Corona beer maker raised its full-year profit
forecast and topped Wall Street's estimates for second-quarter
sales and profit.
    Eli Lilly shares gained 4.02 percent after the
company's experimental diabetes drug showed promise in a
mid-stage trial.
    Declining issues outnumbered advancing ones on the NYSE by a
3.98-to-1 ratio; on Nasdaq, a 3.55-to-1 ratio favored decliners.
    There were 831 stocks hitting new 52-week lows across all
U.S. exchanges, the most since stocks were beginning to pull out
of correction territory on Feb. 9, versus 92 new 52-week highs. 

    
 (Reporting by Chuck Mikolajczak; Editing by Dan Grebler and
Leslie Adler)
  
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