US stocks fall as key bond yields resume upward trend after Fed comments
- US stocks fell on Thursday as interest rates resumed their uptrend and jobless claims jumped.
- The 10-Year US Treasury yield rose to 2.83% after Fed President John Williams said a 50 basis point rate hike in May would be reasonable.
- Meanwhile, bank earnings from Goldman Sachs, Morgan Stanley, and Citigroup beat estimates.
US stocks fell on Thursday as investors digested a resumed uptrend in interest rates and a slight uptick in weekly jobless claims.
The 10-Year US Treasury yield surged 13 basis points to 2.83%, representing its highest level since late 2018. The surge in interest rates came after Fed President John Williams said a 50 basis point interest rate hike in May is a "very reasonable option" given the elevated inflation and strong economy.
Meanwhile, jobless claims jumped 18,000 to 185,000 last week after falling to a 54-year low in the prior week. All-in, the low jobless claims still points to a tight labor market as demand for workers outstrips supply.
Here's where US indexes stood at the 4:00 p.m. ET close on Thursday:
- S&P 500: 4,392.59, down 1.21%
- Dow Jones Industrial Average: 34,451.23, down 0.33% (113.36 points)
- Nasdaq Composite: 13,351.08, down 2.14%
Bank earnings rolled in on Thursday, with Goldman Sachs, Morgan Stanley, and Citigroup all reporting first-quarter earnings results that beat analyst estimates, as a strong consumer and profitable trading divisions was enough to outweigh a near-halt in underwriting activity for IPOs.
Wells Fargo's first-quarter earnings results missed analyst estimates as non-interest revenue plunged 28% from the prior quarter.
Elon Musk made waves on Thursday after he delivered a hostile takeover proposal to Twitter. Musk offered $54.20 per share for all of Twitter's outstanding shares, representing a value of more than $40 billion and a premium of 18% from Wednesday's close.
While Twitter's board of directors reviews the offer, Wedbush analyst Dan Ives thinks a deal will ultimately get done in a "soap opera" fashion. Alternatively, Stifel cut Twitter to "sell" on Thursday, arguing that Musk's offer puts a near-term ceiling on the share price.
Holders of Russian dollar bonds have said they cannot accept rubles, in the latest sign the government is headed for a default. Russia last week transferred rubles to make bond payments, after the US Treasury blocked its attempts to pay in dollars.
Bitcoin fell 3.72% to $39,799. Ether prices fell 3.92% to $2,996.
Gold fell as much as 0.46% to $1,975.50 per ounce. The yield on the 10-year Treasury added 13 basis points to 2.83%.
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