U.S. stocks concluded a volatile trading session on Thursday essentially unchanged after experiencing several sudden reversals throughout the day.
The S&P 500 finished nearly flat, edging down by less than 0.1 per cent following a series of fluctuations between gains and losses. The Dow Jones Industrial Average fell 161 points, or 0.3 per cent, while the Nasdaq composite managed a gain of less than 0.1 per cent.
The market’s rally has cooled since the S&P 500 neared its all-time high earlier this week, as mounting pressure from the bond market has intensified.
The yield on the 10-year Treasury climbed to 5.20 per cent from 5.11 per cent late Wednesday, returning to levels not seen since 2007. Elevated yields tend to slow the broader economy by increasing borrowing costs, while simultaneously putting downward pressure on stock valuations and other stock prices remain relatively resilient despite anxieties surrounding war, inflation, and trade tariffs.
“The headlines have turned more ominous, but the underlying drivers of growth remain intact,” strategists at Barclays wrote in a report. “As long as AI-related investment, US corporate profitability, and consumer spending continue to beat expectations, the economy and markets seem capable of absorbing tighter central banks and higher rates.”
Stitch Fix became one of the latest U.S. firms to report quarterly results that exceeded analyst expectations late Wednesday. However, its stock tumbled 21.6 per cent after the company warned that “a more challenging consumer environment” could hinder revenue growth in the upcoming fiscal year.
Darden Restaurants, the parent company of Olive Garden and LongHorn Steakhouse, saw its shares fall 3 per cent after reporting quarterly profits that met analyst projections.
High bond yields negatively impact prices across various stock sectors, often hitting those perceived as the most expensive the hardest. This has placed a target on AI-related stocks, which had surged for years amid the frenzy surrounding the technology.
Higher yields also increase borrowing costs for companies looking to build AI data centers, which could potentially delay construction and dampen demand for AI chips.
Nvidia slipped 0.4 per cent, serving as the largest drag on the S&P 500.
On the positive side, Everpure saw its shares jump 11.2 per cent after the data storage and management firm reaffirmed its financial guidance for the current fiscal year and projected that revenue growth would accelerate in the next.
In total, the S&P 500 fell 1.90 points to 7,704.13. The Dow Jones Industrial Average dropped 161.61 points to 51,349.98, and the Nasdaq composite rose 3.34 points to 26,939.37.
International stock markets also saw modest declines across much of the globe. A 1.2 per cent drop in Shanghai and a 0.8 per cent gain in Tokyo represented two of the more significant movements.
