Stocks slump as 10-year yield hits highest level since January 2020

10-year yield ticks above 1.77%

U.S. equity markets closed lower Tuesday as bond yields reached a 14-month high ahead of President Biden's unveiling of his $3 trillion infrastructure package set for Wednesday.

The Dow Jones Industrial Average fell 100 points, or 0.3%, while the S&P 500 and the Nasdaq Composite were lower by 0.31% and 0.11%, respectively. The losses losses came as the 10-year yield ticked above 1.77% early in the session to a level last seen in January 2020. The benchmark yield finished the session little changed near 1.72%.

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 33743.83 -56.77 -0.17%
SP500 S&P 500 4121.71 -7.09 -0.17%
I:COMP n.a. n.a. n.a. n.a.

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Stocks fell despite a jump in the Conference Board's Consumer Confidence index which rose to a reading of 109.7, the highest level in a year.

In stocks, the early spike in bond yields weighed on mega-cap technology stocks with Apple Inc. and Microsoft Corp. ending among the laggards.

Ticker Security Last Change Change %
MSFT MICROSOFT CORP. 256.75 +0.90 +0.35%
AAPL APPLE, INC. 130.91 -2.09 -1.57%

Meanwhile, financials outperformed as the rise in longer-dated bond yields steepened the yield curve.

Ticker Security Last Change Change %
XLF FINANCIAL SELECT SECTOR SPDR ETF 35.23 +0.09 +0.24%
CS CREDIT SUISSE GROUP AG 10.73 +0.09 +0.84%

However, Credit Suisse AG and Nomura Holdings Inc. remained under pressure after both said on Monday that they would suffer substantial losses due to the hedge fund Archegos Capital Management needing to unwind billions of dollars of positions.

Ticker Security Last Change Change %
CS CREDIT SUISSE GROUP AG 10.73 +0.09 +0.84%

Elsewhere, PayPal Holdings Inc. will launch in the coming months launch a cryptocurrency checkout service for U.S. customers that will convert digital coins into fiat currency that can be used to make purchases.

Ticker Security Last Change Change %
PYPL PAYPAL HOLDINGS, INC. 266.06 -0.71 -0.27%

In commodities, West Texas Intermediate crude oil fell $1.01 to $60.55 per barrel as the Suez Canal reopened following the refloating of the container ship Ever Given and gold tumbled $28.30 $1,686.30 per ounce.

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Overseas markets rallied with Germany’s DAX 30 trading up 1.29%, France’s CAC 40 advancing 1.21% and Britain’s FTSE 100 ticking higher by 0.53%.

In Asia, Hong Kong’s Hang Seng index gained 0.84%, China’s Shanghai Composite added 0.62% and Japan’s Nikkei 225 rose 0.16%.