The stock market’s decline coincided with a significant increase in bond yields. However, market experts remain cautiously optimistic about the overall trajectory.
The S&P 500 (INDEXSP: .INX) saw its eight-day winning streak come to an end on Thursday, November 10, as a sudden surge in yields and concerns about inflation sent ripples through the market.
S&P 500 and Stock Market Snap Winning Streak
According to reports, the S&P 500 faced a decline of 0.81% and closed at 4,347.35. The decline was mirrored by the Nasdaq Composite (INDEXNASDAQ: .IXIC), which lost 0.94%, and the Dow Jones Industrial Average (INDEXDJX: .DJI), dropping 0.65%.
Federal Reserve Chair Jerome Powell’s remarks contributed to the day’s market volatility. Powell hinted at the need for more efforts to combat inflation, even though there have been encouraging signs of a recent slowdown.
Powell stated during an International Monetary Fund event:
“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance.”
This statement prompted a sell-off in stocks, with the market hitting session lows. Investors are closely monitoring the Federal Reserve’s approach to inflation and interest rates, recognizing their significant impact on market movements.
The recent market movements follow a muted but significant day on Wall Street, where the S&P 500 and Nasdaq finished up about 0.1%, marking their lengthiest stretch of positive sessions in two years. The Dow, on the other hand, ended down by about 0.1%, snapping a seven-day run of gains.
For the week, the Dow has lost 0.5%, the S&P 500 is on track to finish roughly 0.3% lower, and the Nasdaq is the only major average in positive territory, with a projected gain of 0.3%.
Interest Rate Volatility and Market Response
The stock market’s decline coincided with a significant increase in bond yields. A disappointing US Treasury auction earlier in the day heightened market jitters. The 10-year Treasury yield increased by more than 12 basis points to 4.634%, while the 30-year bond rate increased by about 11 basis points to 4.772%. State Street Global Advisors’ Michael Arone stated, “Interest rate volatility is dominating the stock market.”
Despite the recent downturn, some sectors showed resilience. Walt Disney Co (NYSE: DIS) experienced a notable 6.9% increase following a better-than-expected profit report and an expansion of its cost-cutting plan. In contrast, Arm Holdings Plc (NASDAQ: ARM) dipped 5.2% after its first quarterly report as a public company.
MGM Resorts International (NYSE: MGM) slipped 1.1%, even after announcing strong results and a new share buyback program.
However, market experts remain cautiously optimistic about the overall trajectory. The chief investment strategist at State Street Global Advisors commented, “I do think that we’re set up for a kind of a positive conclusion to what’s been a positive year. But I do think that movements in interest rates will ultimately determine kind of where we head from here.”