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US Stocks Fall as Bond Yields Rise 02/25 09:26
Stocks were mostly lower in the early going Thursday.
(AP) -- Stocks were mostly lower in the early going Thursday as the recent
theme of the market -- rising bond yields and falling prices of technology
companies -- continued to weigh on trading.
Shares of companies embraced by online retail investors earlier this year
were sharply higher, including GameStop, which surged 50%.
The S&P 500 index fell 0.2% as of 9:50 a.m. Eastern. The Dow Jones
Industrial Average also dropped 0.2%, and the Nasdaq Composite was down 0.3%.
Once again it was the bond market that was driving the stock market's
direction and investors' moods. The yield on the 10-year U.S. Treasury note
rose to 1.48%, a level not seen in more than a year and far above the 0.92%
level it was trading at only two months ago. That indicated investors were
moving money out of bonds, a sign they higher inflation and economic growth.
Global stock markets have soared over the past six months on optimism about
coronavirus vaccines and central bank promises of abundant credit to support
struggling economies. Those sentiments have faltered due to warnings the rally
might be too early and that inflation might rise.
On Wednesday, Federal Reserve Chair Jerome Powell affirmed the Fed's
commitment to low interest rates in a second day of testimony to legislators in
Washington.
The central bank earlier indicated it would allow the economy to run hot to
make sure a recovery is well-established following its deepest slump since the
1930s. Powell said it might take more than three years to hit the Fed's target
of 2% inflation.
Investors also are looking for Congress to approve President Joe Biden's
proposed economic aid plan. That includes $1,400 checks to most Americans.
However, the plan faces staunch opposition from Republicans and is still
subject to negotiations. Democrats have chosen to use the legislative process
known as reconciliation that would allow them to pass the bill without GOP
support.
After being out of the news for a few weeks, the stocks embraced by large
group of active retail traders on messaging boards like Reddit were surging
once again. GameStop's jump in early trading Thursday came after its share
price more than doubled in the last hour of trading Wednesday. AMC
Entertainment was on track for a fourth straight day of sharp increases
Thursday.
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