Dow Jones leads stocks lower as rising Treasury yields unnerve

US stocks fell into the red on Wednesday, after a rise in Treasury yields unnerved investors already pondering whether the latest data will change the direction on interest rates.

The S&P 500 (^GSPC) fell 0.7%, while the Dow Jones Industrial Average (^DJI) fell nearly 0.9%, down about 350 points. The Nasdaq Composite Index (^IXIC) also fell by more than 0.7%.

Stocks are selling off as investors weigh a jump in US bond yields after a failed government debt auction, reflecting concerns that the Federal Reserve will keep interest rates high for longer.

The yield on the five-year Treasury note rose to a four-week high on Tuesday, while the yield on the 10-year Treasury note (^TNX) surpassed the key level of 4.5%. On Wednesday, the benchmark yield rose to trade around 4.57%.

These concerns appear to outweigh hopes for the growth of artificial intelligence, which has lifted the Nasdaq to a record high in the course of Nvidia’s (NVDA) post-earnings rally.

Investors are trying to figure out what stronger-than-expected consumer confidence data on Tuesday means for Federal Reserve policy making, but they are bracing for a long wait for the pivot to rate cuts after a series of warnings from bank officials.

Read more: How does the labor market affect inflation?

The release of the Fed’s Beige Book later Wednesday may shed more light ahead of Friday’s reading on personal consumption expenditures, the central bank’s preferred measure of inflation.

He lives3 updates

Wednesday, May 29, 2024 at 3:00 PM GMT+1

American Airlines cuts earnings forecasts, shares decline

American Airlines (AAL) stock fell more than 13% on Wednesday morning as the airline cut its dividend according to guidance for the current quarter.

The company now sees earnings per share in the range of $1 to $1.15 in the current quarter, down from previous guidance of $1.15 to $1.45. It is also now seeing a 5% to 6% decrease in total revenue per available seat compared to the previous year. American Airlines had previously expected the measure to fall in a range of 1% to 3%.

The company also announced that commercial chef Vasu Raja will leave the company in June.

“The reduction appears to be a combination of increased domestic competition as well as loss of corporate share,” Bank of America analyst Andrew DiDora said.

In Didora’s view, the weak outlook for American Airlines comes at a time when the demand outlook in the airline industry appears strong. As Axios I mentioned this morning, five of the busiest travel days in TSA data tracking dating back to 2001, came in the past two weeks. That includes a record 2.95 million passengers on the Friday before Memorial Day weekend.
Wednesday, May 29, 2024 at 2:35 PM GMT+1

Stocks slide as yields rise

Stocks fell at the open after a rise in Treasury yields unnerved investors already considering whether the latest data will change the direction on interest rates.

The S&P 500 (^GSPC) fell 0.7%, while the Dow Jones Industrial Average (^DJI) fell nearly 0.9%, down about 350 points. The Nasdaq Composite Index (^IXIC) also fell by more than 0.7%.

On Tuesday, the yield on the five-year Treasury note rose to its highest levels in almost four weeks, while the yield on the ten-year note (TNX) surpassed the key level of 4.5%. On Wednesday, the benchmark yield rose further to trade around 4.57%.
Wednesday, May 29, 2024 at 11:58 AM GMT+1

Economic prospects are brightening…

And who doesn’t want some sunny and positive macro data on Hump Day? Not this guy, who’s always looking for optimistic things.

I came armed with a dose of just that.

More than eight in ten senior economists expect the global economy to strengthen or remain stable this year, according to a new study by the World Economic Forum today. This is nearly double the percentage in the January report.

The percentage of those who expected a decline in global economic conditions decreased to 17% from 56% in January.

Inflation may have more room to calm, according to new research from the World Economic Forum. (World Economic Forum)