Stock Market Today: Stocks slide and Treasury yields spike on inflation worries

Stocks are looking to retreat from recent record highs as inflation pressures test Federal Reserve interest-rate-cut bets.

May 29, 2024 - 18:30

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Stock Market Today: Stocks slide and Treasury yields spike on inflation worries

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U.S. equity futures moved lower Wednesday while Treasury yields and the dollar spiked, as investors pulled stocks back from near-record highs amid concerns that faster inflation will keep Federal Reserve borrowing rates elevated for much of the year.

Stocks ended mixed yesterday, with the S&P 500 booking a modest gain and the Nasdaq closing at a record, past the 17,000-point mark, on the strength of renewed earnings optimism and a resilient domestic economy.

Data from the Conference Board showed U.S. consumer confidence jumped firmly in May, suggesting a path for robust consumer spending into the summer months.

Renewed inflation concerns have markets resetting bets on an autumn Fed rate cut.
Win McNamee/Getty Images

However, two benchmark bond auctions, which formed part of the Treasury's $183 billion in weekly funding, drew muted interest from both foreign and domestic investors amid worries that headline inflation levels could stay elevated alongside the improving economic growth story.

Set against comments from Minneapolis Fed President Neel Kashkari, who repeated his view that another rate hike can't be excluded, Treasury yields shot to the highest levels in more than a month.

Benchmark 10-year notes were marked at 5.471% in overnight dealing, with 2-year notes rising to 4.958% and ready to test the 5% mark. The dollar jumped 0.1% against a basket of its global peers to trade at 104.707.

CME Group's FedWatch, meanwhile, now suggests just a 44% chance of a September rate cut, down from as high as 72% early last month.

The rise in yields has stocks looking at a notable pullback this morning, with futures contracts tied to the S&P 500 suggesting a 27-point opening-bell decline and those linked to the Dow Jones Industrial Average suggesting a 205-point slump.

The tech-focused Nasdaq, which closed at 17,019.88 points last night, is called 100 points lower.

Stocks on the move include American Airlines (AAL) , which was marked 8.3% lower in premarket trading. The carrier slashed its second-quarter-profit forecast and said Vasu Raja, its chief commercial officer, would leave the group next month.

In overseas markets, Europe's Stoxx 600 fell 0.61% in early Frankfurt trading, as benchmark 10-year German government bonds rose to a one-month high of 2.606%. Britain's FTSE 100 slipped 0.3% in London.

More Wall Street Analysts:

Overnight in Asia, Japan's Nikkei 225 closed red for the third consecutive session, falling 0.77% amid the downdraft from last night's late weakness on Wall Street.

The regionwide MSCI ex-Japan index, meanwhile, fell 1.58% into the close of trading.