US stocks end mixed on rising Treasury yields, Middle East jitters

It was an extreme seesaw day with all three indexes up and down like crazy all day, the Dow swinging back and forth between a +270 and a -23, but closing modestly up with the S&P and Nasdaq closing near break-even. There was yet another reminder from the Fed today that rate cuts would likely be delayed longer plus increased jitters over Israel’s announcement that they would not be heeding the calls for restraint. Q1 was mixed, with United Health and Morgan Stanley positive but BofA and J&J negative. 

There’s lots of volatility. As today’s expert put it, “Middle East concerns are weighing on decisions whether to buy or not. You need strong earnings to keep this rally moving so, depending on who’s reporting, you’ll get some ripples.”  Crude edged down slightly while gold inched up as a safe haven asset.  Volume came in at 11.6 billion. 

US stocks end mixed on rising Treasury yields, Middle East jitters

By Stephen Culp

Tue April 16, 2024 4:20 PM

DJ: 37,735.11  -248.13        NAS: 15,885.02  -290.08        S&P: 5,061.82  -61.59      4/15

DJ: 37,798.97  +63.86         NAS: 15,865.25  -19.77          S&P: 5,051.41  -10.41      4/16

NEW YORK, April 16 (Reuters) - Wall Street see-sawed to a mixed close on Tuesday as rising U.S. Treasury yields and elevated geopolitical worries counteracted a generally positive string of first-quarter corporate results.  While the S&P 500 and the Nasdaq ended the session modestly lower, the blue-chip Dow was boosted into positive territory by UnitedHealth Group (UNH.N), opens new tab shares in the wake of its earnings report.  But stocks were held in check by benchmark Treasury yields climbing to fresh five-month highs due to dimming expectations of an interest rate cut from the U.S. Federal Reserve.  Fed Chair Jerome Powell said on Tuesday it will likely take the central bank longer than expected to become confident that inflation is falling, due to a run of disappointing data.  Tensions arising from the growing conflict in the Middle East were brought back to the boil after Israel vowed to respond to Iran's weekend attack despite international calls for restraint.

"We’re into earnings season, where on any particular day, depending on who’s reporting, you’ll get some ripples," said Chuck Carlson chief executive officer at Horizon Investment Services in Hammond, Indiana. "Second, there's the continuing overhang of Middle East concerns weighing on decisions whether to buy or not, and third, you’ve got investors trying to evaluate the apparent reacceleration of inflation."  With first-quarter earnings season underway, upbeat results from UnitedHealth as well as Morgan Stanley (MS.N), opens new tab offset Bank of America's (BAC.N), opens new tab and Johnson & Johnson's (JNJ.N), opens new tab respective profit drop and revenue miss.  "I expect the market to begin to buy again, but in the near term geopolitical concerns are outweighing the strength of the U.S. economy," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "You need strong earnings to keep this rally moving."  But I would not say that it's political or that you just because you're getting close to the election that the Fed would not cut because their November meeting actually comes two days after the election.

The Dow Jones Industrial Average (.DJI), opens new tab rose 63.66 points, or 0.17%, to 37,798.77; the S&P 500 (.SPX), opens new tab lost 10.44 points, or 0.21%, to 5,051.38; and the Nasdaq Composite (.IXIC), opens new tab dropped 19.77 points, or 0.12%, to 15,865.25.

European shares notched their biggest single-day percentage drop in over nine months as rising anxieties over the Middle East conflict dampened investor risk appetite.  The pan-European STOXX 600 index (.STOXX), opens new tab lost 1.53% and MSCI's gauge of stocks across the globe (.MIWD00000PUS), opens new tab shed 0.77%.  Emerging market stocks lost 2.01%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab closed 2.08% lower, while Japan's Nikkei (.N225), opens new tab lost 1.94%.

Yields for 10-year U.S. Treasuries hit a new five-month high on diminishing expectations of Fed policy easing this year, and after stronger-than-expected economic data from China revived worries that inflation could reaccelerate.  Benchmark 10-year notes last fell 8/32 in price to yield 4.6612%, from 4.628% late on Monday.  The 30-year bond last fell 11/32 in price to yield 4.7626%, from 4.74% late on Monday.

The dollar touched a five-month high against a basket of world currencies but was last essentially unchanged, as the yen continued to hover near 34-year lows, keeping intervention watchers on alert.  The dollar index (.DXY), opens new tab rose 0.12%, with the euro down 0.02% to $1.062.  The Japanese yen weakened 0.23% versus the greenback to 154.66 per dollar, while sterling was last trading at $1.2431, down 0.10% on the day.

Crude prices settled nearly flat as economic headwinds countered supply concerns arising from geopolitical turmoil.  U.S. crude edged down 0.06% to settle at $85.36 per barrel, while and Brent settled at $90.02 per barrel, down 0.09% on the day.  Gold prices inched higher as the safe-haven metal's gains were capped by rising Treasury yields.  Spot gold added 0.3% to $2,389.69 an ounce. 

Per the CBOE, volume came in at 11.6 billion.