Stock Market Today: Dow Closes Lower as Treasury Yields Rise
Dow Drops as Treasury Yields Surge
The Dow closed lower on Thursday as investors weighed a surge in the 10-year Treasury yield, mixed quarterly results, and remarks from Federal Reserve Chairman Jerome Powell. The market sentiment was affected by the tightening of financial conditions due to the increase in Treasury yields.
Market Performance
The Dow fell by 1%, equivalent to 250 points, while the S&P 500 slipped 1%, and the Nasdaq fell 0.9%.
Powell’s Caution on Rate Hikes
Federal Reserve Chairman Jerome Powell stated that the Fed is “proceeding carefully” with future rate hikes. He expressed concerns about the significant tightening of financial conditions caused by the spike in Treasury yields. However, Powell also acknowledged that continued economic growth may force the Fed to further tighten policy.
Labor Market Strength and Treasury Yields
The Fed chief’s remarks came after a report showing strong labor market conditions, indicating underlying strength in the economy. This pushed the 10-year Treasury yield to flirt with 5% for the first time since 2007.
Netflix Surges, Tesla Disappoints
Netflix saw a significant jump of over 16% after reporting better-than-expected third-quarter earnings. The streaming giant achieved its best subscriber growth since the second quarter of 2020. Additionally, Netflix announced price hikes in the US, UK, and France, which will contribute to its average revenue per user.
Tesla, on the other hand, experienced a 9% plunge after its Q3 results fell short of Wall Street expectations. Price cuts affected the company’s margins, leading to disappointment among investors.
Taiwan Semiconductor’s Positive Performance
Taiwan Semiconductor Manufacturing Company (TSMC) stood out with a rise of more than 3% despite the broader decline in semiconductor stocks. TSMC’s better-than-expected performance was praised by Wall Street. The chipmaker reported a rebound in chip demand, particularly for artificial intelligence applications.
TSMC management also indicated that customer inventory levels are approaching a healthier state, with urgent orders being placed. This positive outlook contributed to the company’s strong performance.
Overall, the stock market experienced a downward trend due to the surge in Treasury yields and mixed earnings results. Investors closely monitored the Fed’s cautious approach to rate hikes and the impact on financial conditions. While Netflix celebrated impressive subscriber growth, Tesla faced disappointment, and Taiwan Semiconductor stood out with positive performance despite the decline in semiconductor stocks.
