Stock Market Today: Shares in Asia retreated on Thursday, following a downturn in U.S. stocks influenced by rising bond yields. The Dow Jones Industrial Average dropped more than 400 points, contributing to a negative sentiment in the global markets.
In Tokyo, the Nikkei 225 benchmark declined by 1.5%, closing at 37,980.55. Hong Kong’s Hang Seng index fell 0.6% to 18,362.23, while the Shanghai Composite index edged up slightly by less than 0.1%, ending at 3,113.06.
Australia’s S&P/ASX 200 dropped 0.4% to 7,632.10, and South Korea’s Kospi decreased by 0.9% to 2,652.98. Taiwan’s Taiex also lost 0.8%.
“Hotter and stickier than expected global inflation appears to be taking the air out of asset markets,” Mizuho Bank commented.
The bank noted that the so-called “Goldilocks” scenario—where conditions are just right for economic growth—is unraveling due to concerns about the adverse impacts of higher interest rates.
Stock Market Today: U.S. Market Recap
On Wednesday, the S&P 500 fell by 0.7% to 5,266.95, reducing its gains for May, which had been set to be its best month since November. Approximately 80% of the stocks in the index saw declines.
The Dow Jones Industrial Average dropped 1.1% to 38,441.54, and the Nasdaq Composite slipped 0.6% to 16,920.58, despite recently reaching an all-time high.
Sector-Specific Performance
Airline stocks were particularly hard hit, with American Airlines Group leading the slump. The airline cut its profit forecast and other financial targets for the spring, citing both lower fuel costs and disappointing revenue trends. Its shares plummeted 13.5%.
In the energy sector, ConocoPhillips fell 3.1% after announcing an all-stock deal to acquire Marathon Oil, valuing the company at $22.5 billion, including $5.4 billion in net debt. Marathon Oil’s shares, however, rose 8.4% following the announcement.
Advance Auto Parts saw a significant decline of 11% after its quarterly results and revenue narrowly missed analysts’ expectations.
Impact of Rising Treasury Yields
Another factor weighing on the stock market was the rise in longer-term Treasury yields. The 10-year yield increased to 4.61% from 4.54% on Tuesday, following an auction of $44 billion in seven-year Treasurys.
Despite a general downward trend for the month, yields have been creeping up since mid-May when they fell below 4.40%. Higher Treasury yields generally negatively impact the prices of various investments.
This month’s fluctuations in yields are partly due to traders adjusting their expectations regarding when the Federal Reserve might begin cutting its main interest rate, which is currently at a two-decade high. Persistent inflation has led to repeated delays in forecasts for rate cuts.
Federal Reserve and Economic Outlook
The Federal Reserve aims to balance economic activity by maintaining high interest rates to control inflation without triggering widespread layoffs.
A report released by the Fed on Wednesday highlighted that businesses nationwide have noticed consumers resisting further price hikes, which in turn affects corporate profits as operational costs rise.
Despite concerns about reduced consumer spending, particularly among lower-income groups, BNP Paribas economists remain optimistic. They anticipate that a robust job market, slowing inflation, and gains from cryptocurrencies will continue to support economic growth.
Stock Market Today: Bright Spots on Wall Street
Despite broad market challenges, certain stocks have continued to perform well. Nvidia’s impressive profit report has driven a surge in stocks related to artificial intelligence technology. Nvidia’s stock rose by 0.8% on Thursday, continuing its upward trend.
Retailer Dick’s Sporting Goods saw its shares jump 15.9% after surpassing analysts’ profit and revenue expectations for the latest quarter and raising its annual profit forecast.
Chewy, an online pet supplies retailer, also reported stronger-than-expected profits, causing its stock to surge by 27.1%.
Commodity Markets
In commodity trading, U.S. benchmark crude oil rose by 11 cents to $79.34 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, increased by 8 cents to $83.51 per barrel.
Currency Markets
In currency trading, the U.S. dollar slipped to 157.42 Japanese yen from 157.65 yen, while the euro edged down to $1.0800 from $1.0803.
The retreat in Asian markets reflects broader concerns about global inflation and the impact of higher interest rates, highlighting the interconnectedness of international financial markets.
