US stocks fall under continued pressure from high bond yields

NEW YORK (AP) — Pressure continues to bear down on Wall Street from the bond market, and U.S. stocks are heading toward another loss. The S&P 500 fell 0.5% early Thursday and is on track for a third straight drop after rallying to the brink of its all-time high. The Dow Jones Industrial Average fell 181 points, and the Nasdaq composite 0.8%. Stocks are sinking under the weight of higher yields in the bond market, which make borrowing money more expensive for everyone and slows the overall economy. The yield on the 10-year Treasury is roughly back to where it was in 2007.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. markets are pointing to a third day of consecutive losses after a remarkable surge in Treasury yields this week continues, as does a rebound in energy prices.

Futures for the S&P 500 fell 0.54% Thursday. Futures for the Dow Jones Industrial Average slipped 154 points, or 0.54%, while the Nasdaq composite sank 0.92%.

Stocks came under significant pressure late Wednesday when the 10-year Treasury jumped to 5.14% from 4.96%, a substantial move higher. High yields undercut prices for stocks and other investments, while also slowing the economy by making it more expensive for everyone to borrow money.

Yields continued to hover near a two-decade high Thursday, around 5.13%, sustained by anxiety over high inflation, the U.S. government’s heavy debt and other concerns.

Federal Reserve Bank of New York President John Williams, speaking in London on Thursday, hinted that another hike to the Fed’s benchmark interest rate this year would be a “reasonable way of thinking about it.”

He stressed, however, that any decision will be made based on incoming data.

Fed Gov. Michael Barr said in a speech this week that further hikes “are likely to be needed” to get inflation to the Fed’s 2% target.

The Fed raised its benchmark interest rate last week for the first time since 2023.

Potential rate hikes later this year are dragging on the high-flying tech sector, which relies on access to credit for rapid growth. All economic sectors headed south before the market opened, led by the tech sector, notably chip makers.

Marvell Technology and Intel both fell about 3%.

The cost of borrowing adds to growing anxiety about prices for everything else in the U.S., including gasoline, which has marched higher this week, trapped in the gravitational pull of crude.

Benchmark U.S. crude rose more than 1% to $93.17 a barrel. Brent crude, the international standard, gained 1.25% to $99.35 a barrel.

The cost for a gallon of regular gasoline in the U.S. ticked higher to an average of $4.48 Thursday, according to motor club AAA. Last year at this time, that gallon cost $3.16. Diesel, which reaches into almost every sector of the economy because of its use in shipping and manufacturing, hit an all-time high this week.

Investors are also closely watching for what might come of the talks between Presidents Donald Trump and Xi Jinping later Thursday at the White House. Topics of trade, the war in Iran and AI are front and center. There is not much in the way of high hopes for any major agreements.

Japan’s benchmark Nikkei 225 gained 0.8% to finish at 65,513.99, as some chipmakers got a boost from the recent interest in artificial intelligence. Australia’s S&P/ASX 200 fell 0.7% to 8,702.00.

Although the Bank of Japan recently raised its benchmark interest rate to stem the slide in the Japanese yen, the move was largely figured in for weeks. And so the yen hasn’t really bounced back. A weak yen works as a negative for oil-importing Japan when oil prices are soaring.

In currency trading, the U.S. dollar edged up to 158.37 Japanese yen from 158.30 yen. The euro was unchanged at $1.1388.

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Yuri Kageyama reported from Tokyo and is on Threads: https://www.threads.com/@yurikageyama