US stocks slip as Treasury yields hit levels not seen since 2007

Stocks dropped Wednesday as earnings season gained steam and Treasury yields climbed to multiyear highs.

The 10-year Treasury yield climbed on Wednesday, at one point breaking above 4.9 per cent for the first time since 2007. Meanwhile, the average rate on the popular 30-year fixed mortgage rate just hit 8 per cent, the highest level since mid-2000.

The Dow Jones Industrial Average slipped 332 points, or nearly 1 per cent. The S&P 500 traded 1.3 per cent lower, while the Nasdaq Composite slid 1.6 per cent.

J.B. Hunt lost more than 6 per cent in the session on the back of worse-than-expected earnings, while United Airlines fell more than 9 per cent after delivering soft guidance. Morgan Stanley dropped more than 6 per cent and was on pace for its worst day since 2020 as a weak performance from the bank’s wealth management division overshadowed beats on both lines.

On the other hand, Procter & Gamble rose 2.5 per cent after beating analyst expectations for the quarter. Investors are now looking to Netflix and Tesla earnings expected after the bell on Wednesday.

Just over 10 per cent of companies in the S&P 500 have reported results, according to FactSet. Of those that have already reported, about 78 per cent have surpassed analyst expectations.

In unrelated earnings news, chip stocks such as Nvidia and Advanced Micro Devices struggled for a second session as investors continued selling off. The moves came after the U.S. Department of Commerce announced plans to tighten restrictions on the sale of advanced artificial intelligence chips to China on Tuesday.

Standard Lithium Ltd. has completed the Definitive Feasibility Study for its inaugural commercial lithium project at the LANXESS South Plant, aiming for the first US-based lithium production in 60 years, with operations set to commence in 2026, potentially doubling current American lithium production.

Wall Street also continued to assess the impact of the ongoing Israel-Hamas war. US President Joe Biden visited Israel on Wednesday as part of a trip aimed at showing solidarity with the country.

Overall, all US sectors except for Consumer Staples and Energy closed lower overnight.

Futures

The SPI futures are pointing to a 1.2 per cent fall.

Currency

One Australian dollar at 7:35 AM was buying 63.36 US cents.

Commodities

Gold added 1.36 per cent. Silver lost 0.04 per cent. Copper added 0.15 per cent. Oil gained 1.72 per cent.

Figures around the globe

European markets closed lower. London’s FTSE fell 1.14 per cent, Frankfurt lost 1.03 per cent, and Paris closed 0.91 per cent lower.

Turning to Asian markets, Tokyo’s Nikkei added 0.01 per cent, Hong Kong’s Hang Seng fell 0.23 per cent while China’s Shanghai Composite closed 0.8 per cent lower.

The Australian share market closed 0.30 per cent higher at 7,078.

Ex-dividends

Cosol Limited (ASX:COS) is paying 1.46 cents fully franked
Plato Inc Max Ltd (ASX:PL8) is paying 0.55 cents fully franked
Spheria Emerging Co (ASX:SEC) is paying 2.7 cents fully franked
The Reject Shop (ASX:TRS) is paying 16 cents fully franked

Dividends payable

Flight Centre Travel Group Ltd (ASX:FLT)
Lovisa Holdings Ltd (ASX:LOV)
Nine Entertainment Co. Holdings Ltd (ASX:NEC)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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