The S&P 500 fell Thursday, ending an eight-day winning streak, as a sharp jump in yields rattled investors.
The benchmark index declined 0.81%, closing at 4,347.35, while the Nasdaq Composite lost 0.94% and settled at 13,521.45. The Dow Jones Industrial Average dropped 220.33 points, or 0.65%, to close at 33,891.94.
Stocks hit session lows after Federal Reserve Chair Jerome Powell indicated more work may need to be done to bring down inflation, although the recent slowdown in pace has been an encouraging sign for policymakers.
“The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 percent over time; we are not confident that we have achieved such a stance,” he said in prepared remarks for an International Monetary Fund event.
The move lower in stocks coincided with an uptick in bond yields. A weak U.S. Treasury auction earlier in the session did not help the situation. The benchmark 10-year Treasury yield was up more than 12 basis points at 4.634%. The 30-year bond rate jumped about 11 basis points to 4.772%.
“Interest rate volatility is dominating the stock market,” said State Street Global Advisors’ Michael Arone. “That’s what we’ve seen.”
“I do think that we’re set up for a kind of a positive conclusion to what’s been a positive year,” the chief investment strategist said. “But I do think that movements in interest rates will ultimately determine kind of where we head from here.”
Disney rose 6.9% a day after reporting better-than-expected profit and expanding its cost-cutting plan, while Arm dipped 5.2% following its first quarterly report as a public company. MGM Resorts slipped 1.1% even after posting strong results and a new share buyback program.
Stocks are coming off a muted but momentous day on Wall Street. The S&P 500 and tech-heavy Nasdaq finished up about 0.1% each, notching their lengthiest stretch of positive sessions in two years. The Dow finished down by about 0.1%, snapping a seven-day run of gains.
For the week, the Dow has lost 0.5%, while the S&P 500 is on track to finish roughly 0.3% lower. The Nasdaq is the only major average in positive territory, on track for a 0.3% gain.
