The 10-year Treasury note’s yield soared to 5.15 percent late Wednesday from 5.09 percent late Tuesday, reigniting worries among stock investors that high rates could thwart corporate deal-making and further injure the limping housing market.
The stock market started reacting violently to Treasury yields two weeks ago when the 10-year yield surged past 5 percent for the first time since last summer. Wall Street had traded more mildly in recent days as yields retreated from last week’s peak of nearly 5.30 percent, but Wednesday’s yield advance stoked fears that they could resume their climb.
The Dow fell 146.00, or 1.07 percent, to 13,489.42, after bobbing in and out of positive and negative territory earlier in the day. The Standard & Poor’s 500 index declined 20.86, or 1.36 percent, to 1,512.84, and the Nasdaq composite index fell 26.80, or 1.02 percent, to 2,599.96. The Russell 2000 index of smaller companies fell 12.16, or 1.43 percent, to 836.18.
Troubles at two of Bear Stearns Cos.’ hedge funds also weighed on the markets, especially financial firms: Bear Stearns, JPMorgan Chase & Co. and Merrill Lynch & Co. all fell more than 2 percent. Despite posted a strong rise in quarterly profit the second-largest U.S. investment bank, Morgan Stanley, turned lower by 48 cents to $87.32 as rest of the financial sector got whipped. Expect more volatility on the stock market as long as the bond yields still has no sign of stabilizing.
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June 21st, 2007 by financetwitter
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