US markets end lower amid surging bond yields

05 Mar 2021 Evaluate

The US markets ended lower on Thursday as treasury yields spiked in reaction to highly anticipated comments by Federal Reserve Chair Jerome Powell. The yield on the benchmark ten-year note soared as Powell spoke, ending the session at its highest closing level in a year. Powell acknowledged the reopening of the economy could create some upward pressure on prices. However, Powell suggested the increase in the annual rate of inflation would largely reflect comparisons to the low prices seen a year ago. The Fed chief said he expects the increase in inflation to be transitory and stressed there is a lot of ground to cover before price growth reaches a sustainable level above the Fed’s 2 percent target. Powell said the recent spike in bond yields has caught my attention, and he would be concerned by disorderly conditions in markets or persistent tightening in financial conditions that threatens the achievement of our goals.

On the economic data front, the Labor Department released a report showing a modest increase in first-time claims for US unemployment benefits in the week ended February 27th. The report said initial jobless claims inched up to 745,000, an increase of 9,000 from the previous week's revised level of 736,000. Street had expected jobless claims to rise to 750,000 from the 730,000 originally reported for the previous week. Meanwhile, the Commerce Department released a report showing a bigger than expected increase in new orders for US manufactured goods in the month of January. The Commerce Department said factory orders surged up by 2.6 percent after jumping by an upwardly revised 1.6 percent in December. Street had expected factory orders to advance by 2.1 percent compared to the 1.1 percent increase originally reported for the previous month.

Dow Jones Industrial Average fell 345.95 points or 1.11 percent to 30,924.14, Nasdaq dropped 274.28 points or 2.11 percent to 12,723.47 and S&P 500 was down by 51.25 points or 1.34 percent to 3,768.47.