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While you were sleeping: Rising yields weigh on Wall St

While you were sleeping: Rising yields weigh on Wall St

By Margreet Dietz

April 25 (BusinessDesk) - Wall Street slid as shares of Alphabet, 3M and Caterpillar dropped following their latest earnings updates, while investors also worried about climbing US Treasury yields.

The yield on the 10-year Treasury note broke 3 percent for the first time in four years, before easing to 2.99 percent.

"It's certainly a psychological level for people," said Gary Pollack, head of fixed-income trading at Deutsche Bank Private Wealth Management, CNBC reported. "We have a lot of supply this week, and that's certainly putting pressure on the market.”

“The quarterly refundings have been settings records,” Pollack noted.

Wall Street declined. In 1.31pm trading in New York, the Dow Jones Industrial Average dropped 1.9 percent, while the Nasdaq Composite Index slid 1.6 percent. In 1.16pm trading, the Standard & Poor’s 500 Index declined 1 percent.

The latest results also added to the downbeat mood.

Shares of Google parent Alphabet slid, down 4.5 percent as of 1.44pm, amid concern about rising costs. Other key tech stocks fell in its wake.

“Given the weakness in Google, you’re seeing profit taking in rest of the FAANG stocks ... a spillover into some of the other tech names,” Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, told Reuters. “Those five names are enough to weigh on Nasdaq and tech stocks.”

“Rising US yields are hurting equities in general, when you combine with the weakness in FAANG stocks, it makes for a tough day in the market,” James noted.

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Indeed, the Dow fell as declines in shares of 3M and those of Caterpillar, recently down 8.5 percent and 5.9 percent respectively, outweighed advances in shares of Verizon and those of Intel, recently up 2 percent and 1.5 percent respectively.

Shares of 3M sank after the maker of Scotch tape and Post-It notes downgraded its full-year earnings forecast.

"A few markets were softer than we anticipated going into the year," CEO Inge Thulin said Tuesday during a call with analysts, according to CNBC.

Shares of Caterpillar dropped, retreating from gains earlier in the session. During the company’s earnings conference call, management said the first quarter was its "high water mark" for the year, Bloomberg reported.

In Europe, the Stoxx 600 Index finished the session with a 0.2 percent decline from the previous close. Germany’s DAX Index also fell 0.2 percent. However, the UK’s FTSE 100 Index rose 0.4 percent, while France’s CAC40 Index increased 0.1 percent.

Here, some predict the latest corporate earnings might bolster the outlook for eurozone stocks in the coming months.

“The FX headwind for the euro zone should be peaking right now—relative surprises are likely to shift from the US to euro zone in the second half,” JPMorgan strategists led by Mislav Matejka wrote in a note, Bloomberg reported. “Revenue growth is rather healthy, and near the highest in years in the US and Europe.”

(BusinessDesk)

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