Wall Street On Backfoot As Traders Sweat Over Key Inflation Data: Economist Warns Stock Rally May Stumble If Bond Yield Crosses This Level

FuturesPerformance (+/-)
Nasdaq 100-0.28%
S&P 500-0.37%
Dow-0.92%
R2K-0.01%

Cues From Previous Session

Rising bond yields proved to be the undoing of the market on Wednesday, as the major indices closed uniformly lower. The averages opened down as the benchmark U.S. 10-year Treasury yield hovered above the 4.6% level. The indices moved sideways around these depressed levels before ending notably lower.

The Dow Jones Industrials Average closed at its lowest since early May and the broader S&P 500 Index retreated to a two-week low.

The sell-off was across the board, with the weakness more pronounced in energy, industrial, real estate, material and utility stocks.

Insights From Analysts:

Carson Group’s Ryan Detrick is optimistic about the rally returning. To make his case, he noted that typically after a 5% gain in May, the market rises yet again in June five out of six times. The last three times which saw a 5%+ gain in May saw at least double-digit gains for the year.

Economist David Rosenberg, meanwhile, flagged a potential danger signal. The U.S. 10-year Treasury note has strong resistance at the 4.62% level but if the yield breaks above this level and returns to 5%, there could be a sell-off, he suggested.

“Break higher could set us up for a return to 5%. Equities won't like that one bit,” he said.

Upcoming Economic Data:

See Also: Best Apps For Trading Futures

Stocks In Focus:

Commodities, Bonds And Global Equity Markets:

Crude oil futures extended their slide and traded under $79-a-barrel and gold futures continued to move sideways well below the $2,400 mark. The 10-year Treasury yield edged down slightly to 4.594%. Bitcoin (CRYPTO: BTC) traded nearly flat under $68k.

Wall Street’s weakness weighed down on Asian stocks, with the major markets in the region settling sharply lower, while European stocks posted uneasy gains in early trading.

Read Next: Fed Beige Book Shows Modest Economic Expansion Ahead Of Key GDP, Inflation Data Release

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