US stocks closed nearly flat after a choppy trading session, as investors weighed another rise in Treasury yields with the latest batch of economic data and earnings.
The benchmark US 10-year Treasury yield rose as high as 4.198 per cent during the session, the highest since November, extending its climb from a day earlier following Fitch’s downgrade of the top-tier US credit rating. In late afternoon trade, the 10-year yield had dipped below 4.194.
“It’s really relative to just pricing against bond yields”, said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis.
“Higher yield on 10-year treasuries … has challenged the attractiveness of stocks.”
Investors will watch quarterly results of Apple and Amazon.com, due to come out after the market close. During the session, the iPhone maker slipped, while the e-commerce giant rose.
A Labor Department report showed the number of Americans filing new claims for unemployment benefits increased slightly last week, while layoffs dropped to an 11-month low in July as labour market conditions remain tight.
Investors were waiting for July’s jobs report, due on Friday.
Another report showed the US services sector slowed in July, but businesses faced higher prices for inputs as demand continued to hold up. Richmond Federal Reserve President Thomas Barkin said US inflation remained too high, although recent readings indicated price pressures easing.
According to preliminary data, the S&P 500 lost 12.37 points, or 0.27 per cent, to end at 4,501.02 points, while the Nasdaq Composite lost 13.73 points, or 0.11 per cent, to 13,957.99. The Dow Jones Industrial Average fell 75.07 points, or 0.21 per cent, to 35,207.45.
Eight of the eleven main S&P 500 sectors declined, with more interest rates sensitive Utilities and Real Estate leading losses.
Second-quarter earnings for companies in the S&P 500 are now expected to fall five per cent from a year earlier, according to Refinitiv data.
Qualcomm shares dropped after a gloomy forecast signaled more pain for the biggest maker of smartphone chips from the ongoing slump in the consumer electronics market.
PayPal Holdings tumbled as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement.
US travel stocks fell on downbeat quarterly reports from Spirit Airlines and Expedia that amplified concerns domestic demand may be easing after a strong rebound from pandemic lows.