Global stocks slip as U.S. Treasury yields surge

Marley Jay, The Associated Press</span>
Published Thursday, October 4, 2018 4:46AM EDT
Last Updated Thursday, October 4, 2018 10:37AM EDT

NEW YORK -- Global stocks are falling Thursday as interest rates in the U.S. continue to rise. In the U.S., internet and technology companies and high-dividend stocks are falling. The yield on the 10-year Treasury note is rising further after hitting a seven-year high a day ago.

KEEPING SCORE: The S&P 500 index skidded 17 points, or 0.6 per cent, to 2,907 as of 10:15 a.m. Eastern time. The Dow Jones Industrial Average lost 186 points, or 0.7 per cent, to 26,642. The Nasdaq composite fell 84 points, or 1.1 per cent, to 7,940. The Russell 2000 index of smaller-company stocks gave up 12 points, or 0.8 per cent, to 1,658.

BONDS SURGE: Bond prices fell again. The yield on the 10-year Treasury note climbed to 3.18 per cent from 3.16 per cent. The 10-year yield is at its highest level in more than seven years following encouraging signs on hiring by private companies and growth for services companies.

That data suggests the economy should keep growing at a solid pace. That translates to bigger profits for U.S. companies and continued increases in interest rates by the Federal Reserve, which raises rates to keep inflation in check. But as interest rates continue to rise, it becomes more expensive for consumers and businesses to borrow money, and growth gradually slows.

BANK RALLY: Banks surged for a second day as higher yields mean they make bigger profits on mortgages and other types of loans. JPMorgan Chase gained 1.5 per cent to $116 and Bank of America added 1.8 per cent to $30.55.

The S&P banking index has surged 2.5 per cent over the last two days while the broader S&P 500 is lower. European banks including Barclays and HSBC also climbed.

Among technology companies, Apple fell 0.9 per cent to $229.89 and Microsoft lost 1.2 per cent to $113.84. Facebook sank 1.5 per cent to $160.03 and Alphabet, Google's parent company, lost 2.3 per cent to $1,183.94.

OVERSEAS: France's CAC 40 sank 1.1 per cent and Britain's FTSE 100 tumbled 0.9 per cent. The DAX in Germany added 0.1 per cent resumed after a national holiday.

Hong Kong's Hang Seng index sank 1.7 per cent and Japan's Nikkei 225 index lost 0.6 per cent while the Kospi in South Korea sank 1.5 per cent.

BOOK SALE?: Barnes & Noble climbed 23.6 per cent to $6.75 after the bookseller said it will review offers from potential buyers, including one from founder and chairman Leonard Riggio, the company's biggest shareholder. Even after Thursday's gain, Barnes & Noble stock is essentially flat in 2018 and has lost almost two-thirds of its value since July 2015.

HORTON HEARS A DEAL: Business software companies Hortonworks and Cloudera said they agreed to combine in an all-stock deal. Cloudera shareholders will own most of the new company, which the two sides said will be worth $5.2 billion. Cloudera rose 12.7 per cent to $19.25 and Hortonworks added 12.8 per cent to $24.69.

DRINK TO THAT: Beer and wine maker Constellation Brands climbed 4.8 per cent to $220.81 after its second-quarter profit surpassed Wall Street projections.

DIABETES DRUG: Eli Lilly gained 4.4 per cent to $113.42 after it reported strong results from an experimental diabetes drug. The company said patients with type 2 diabetes experienced meaningful reductions in blood sugar and body weight.

INDIAN SELL-OFF: Shares sank in India as the rupee continued to weaken and investors worried about the country's trade deficit thanks to surging costs for oil imports. The Sensex index fell 2.2 per cent.

ENERGY: Benchmark U.S. crude fell 0.8 per cent to $75.78 per barrel in New York. U.S. crude hit four-year highs this week. Brent crude, used to price international oils, lost 0.7 per cent to $85.65 per barrel in London.

CURRENCIES: The dollar fell to 113.81 yen from 114.34. The euro rose to $1.1524 from $1.1517.

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