May 29, 2024

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Stocks fall as investors fret over jobless claims, inflation | National News

3 min read

Stocks are broadly lower in afternoon trading Thursday as investors are discouraged by economic data that showed continuing pain for recession-impacted Americans as well as the steady rise of bond yields.

The S&P 500 index lost 0.9% as of 1:10 p.m. Eastern. The Dow Jones Industrial Average was down 0.9% and the technology-heavy Nasdaq Composite was down 1.4%. The Russell 2000 index of small companies was down 1.6%.

Energy prices declined for a second day, as the frigid temperatures that impacted Texas and much of the Midwest moved east. Natural gas prices were down 4%. Energy prices have been volatile the past week as record demand for natural gas and other fossil fuels to warm homes has caused electricity prices to skyrocket. Natural gas is typically used as an “on-demand” fuel source to cover increased electrical needs.

Bond yields continue to climb, as murmurs of inflation have started among investors and as the economy continues to climb out of the hole that was created by the pandemic. The yield on the 10-year U.S. Treasury note was at 1.30%, nearly double where it was last fall. It’s now trading at levels seen before the March 2020 pandemic shutdowns.

The climb in bond yields has multiple impacts on the market. When bonds pay higher yields, they are more attractive to a broader group of investors, who tend to move money out of low-performing stocks and into the steady income of bonds. It’s a push-pull phenomenon that’s existed in the market for decades. With bonds no longer paying out rock-bottom yields, the inverse relationship betweens stocks and bonds could be reasserting itself.

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