Wall Street stocks edged higher Thursday, shrugging off weakness in European equities and the latest jump in oil prices.
Despite these drags, Thursday’s bond market moved in a more favourable direction. Markets have been unnerved by fresh multi-year peaks in Treasury yields in recent weeks amid worries over persistent inflation and the worsening debt load facing US government finances.
Higher yields translate into costlier mortgages and other types of credit, testing the resilience of the consumer-driven US economy.
But after hitting the highest level since 2002, the yield on the 10-year US Treasury pulled back.
CFRA Research’s Sam Stovall pointed to “opportunistic” buying of bonds on Thursday.
“Bond yields had risen so much that I think investors are saying, ‘you know what, this looks like a pretty attractive entry point,’” Stovall said. “‘So let me buy some of these bonds in order to lock in these yields that have not been seen for decades.’”
Wall Street stocks veered in and out of negative territory during the day, but finished higher. The broad-based S&P 500 ended up 0.2%.
Earlier, European stocks finished the day lower, with French and UK 10-year yields also striking their highest levels since the 2000s, while 30-year bonds also hit multi-decade peaks on growing inflation fears.
Paris stocks dropped 1.5%, with sentiment also being hit by the French government indicating it plans to raise taxes and cut spending to bring down its deficit.
In Asia, Tokyo and Seoul stock markets closed with strong gains thanks to a positive earnings announcement from chip maker Micron late Wednesday as well as other AI news.
“Asian stocks with links to AI still managed strong gains as they reacted to a blockbuster set of earnings from US memory chip outfit Micron,” said AJ Bell investment director Russ Mould.
Record results by chip maker Micron Technology provided a much-needed boost to investors amid lingering worries about the vast sums pumped into the AI sector in recent years, and when companies will see returns.
Oil prices rose sharply despite signs of improved crude exports from the Middle East. However, markets remained cautious due to a possible worsening of the US-Iran conflict after the latest diplomatic efforts produced no agreement.
Traders are meanwhile awaiting Friday’s US jobs data for clues on whether the Federal Reserve will follow up last month’s interest rate hike, aimed at combatting elevated inflation, with another round of tightening in October.
