Bond plunge, strong dollar, gold price continues to hit record highs
Tesla earnings announcement after closing
Photo = Getty Images While government bond interest rates are rising every day, the New York stock market started lower on the 23rd (local time).
At 10 a.m. Eastern Standard Time, the S&P 500 fell 0.4% from the previous day, and the Nasdaq Composite Index also fell 0.7%. The Dow Jones Industrial Average fell 0.4%.
What put pressure on stocks was the government bond yield, which continued to rise today. The benchmark 10-year government bond yield rose 3 basis points (1bp=0.01%) to 4.23%, continuing to break the highest since July.
McDonald’s (MCD), a Dow component, fell more than 7% after the U.S. Centers for Disease Control and Prevention said 10 people were hospitalized and one person died in an E. coli outbreak linked to the company’s Quarter Pounder burgers. Starbucks (SBUX)’s stock price fell 2% after announcing preliminary quarterly results showing another decline in sales.
Boeing (BA), whose mechanics have been on strike for a month, reported today that it recorded a quarterly net loss of $6.17 billion ($9.97 per share) in the third quarter, significantly exceeding expectations. Sales reached $17.84 billion, exceeding the consensus.
Coca-Cola (KO)’s stock price fell despite both sales and profits exceeding consensus and raising its annual organic sales forecast. AT&T (T)’s sales fell short of expectations, but its stock price rose as the number of mobile subscribers increased more than expected.
Tesla (TSLA) reports earnings after the market closes. Tesla is trading at $216, down 0.8%.
The 10-year Treasury yield continues to rise despite the Federal Reserve cutting interest rates by half a percentage point in September amid strong economic data and concerns about the fiscal deficit.
As the possibility of Trump becoming president again increases, his tariff bomb pledge is expected to raise inflation, encouraging interest rates to rise.
Expectations that US interest rates will not fall as much as expected are leading to a strong dollar. As the dollar and US yields rose, other currencies came under pressure. As the Japanese yen weakened again, the dollar rose 1.1%, reaching 152.79 per dollar. This is the highest since the end of July.
Meanwhile, the Middle East conflict has fueled demand for gold from risk-averse investors, hitting a new high of $2,757.99 per ounce in the early morning.
Prashant Newnaha, Asia-Pacific interest rates strategist at TD Securities, said, “As the probability of Trump winning increases, expectations of a Federal Reserve interest rate cut are diluted, and the possibility that the Federal Reserve will deviate from the path of interest rate cuts for the next six months cannot be ruled out.” He said.
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Nevertheless, Jeff DeGraff, head of technical research at Renaissance Macro Research, emphasized that the environment and trends surrounding stocks remain positive.
Guest reporter Kim Jeong-ah kja@hankyung.com
