Wall Street gains fade as bond yields climb

Volume on US exchanges was 7.80 billion shares, above the 7.23 billion average for the full session over the last 20 trading days.

SPX lost 1.83 points, or 0.06 percent, to 2,821.98 and the Nasdaq Composite . dropped 25.62 points, or 0.35 percent, to 7,385.86.

Tokyo ended 0.9 per cent down while Singapore shed 0.2 per cent and Seoul dived 1.7 per cent. Hong Kong, which in January chalked up a series of records, finished down 0.1 per cent.

"There are concerns that rates are moving up and inflation is firming", said Jeff Zipper, managing director for investments at Private Client Reserve at U.S. Bank. It came after the U.S. Department of Justice in January revoked an Obama administration policy that discouraged federal prosecutors from pursuing marijuana-related crimes in states that had legalized the drug.

Adding to the pressure were disappointing earnings reports from major companies. But with a loss of about more than 1,000 points since Monday, it was the blue chip index's worst weekly performance in two years.

Oil rose after a survey showed the Organization of the Petroleum Exporting Countries' commitment to its supply cuts remains in place, even as US production topped 10 million barrels per day for the first time since 1970.

At 4 p.m. EST, the Canadian dollar was trading 0.3 per cent higher at $1.2269 to the greenback, or 81.51 USA cents. On Wednesday, it touched its strongest in more than four months at $1.2250.

"At now high valuations for developed market equities, investors should tread cautiously in what remains a top-of-cycle environment, even if rising bond yields are more likely a headwind than a precursor to a crisis", said Alastair George, chief strategist at Edison Investment Research.

Wall Street stocks gave up early gains on Thursday as bond yields rose and technology stocks retreated ahead of a host of high-profile earnings. Equity markets are torn between buoyant economic growth and double-digit company earnings, on the one hand, and the possibility that US and euro zone central banks will tighten policy faster than expected, which is pushing up bond yields.

What would happen if the Federal Reserve acts more aggressively than the market expects, and raises the funds rate by a full percentage point instead?

Bond market strategists had expected a more gradual rise in bond yields, which move opposite price.

Initial claims for unemployment benefits fell unexpectedly last week, indicating a tight labor market.

Other major stock indexes fell about 2 percent Friday.

PayPal fell 7.2 percent after former parent eBay said it planned to move to a new primary payment processor.

UPS dropped 6.6 percent after the world's largest package delivery company reported a fourth-quarter net profit that was hurt by additional costs. Doll said his target for fair value on the S&P 500 is 2,800 for year end.

Banks, which benefit from higher interest rates, led the S&P 500 financials.SPSY to a 1.0 percent gain, with Goldman Sachs helping to push the Dow into positive territory.

Amazon.com (AMZN.O) was up over 6.0 percent in after hours trading after results.

Alphabet was down over 4 per cent in extended trade after its quarterly earnings.

But Shanghai closed up 0.4 per cent, Sydney rose 0.5 per cent and Wellington gained 0.4 per cent. Manila, Bangkok and Jakarta were also higher.

Declining issues outnumbered advancing ones on the NYSE by a 1.24-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favoured advancers.

The S&P 500 posted 26 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 72 new highs and 61 new lows.

Volume on US exchanges was 7.80 billion shares, above the 7.23 billion average for the full session over the last 20 trading days.

  • Wendy Palmer