Dow Advances But Nasdaq, S&P 500 Slump Amid Spike In Bond Yields

With traders keeping a close eye on activity in the bond markets, the major U.S. stock indexes are turning in a mixed performance in morning trading on Friday. The Dow has climbed into positive territory, while the broader Nasdaq and S&P 500 have moved to the downside.

Currently, the Dow is up 117.05 points or 0.4 percent at 32,602.64, closing in on a new record intraday high. Meanwhile, the Nasdaq is down 206.91 points or 1.5 percent at 13,191.76 and the S&P 500 is down 18.18 points or 0.5 percent at 3,921.16.

The mixed performance on Wall Street comes amid a jump in bond yields, with the yield on the benchmark ten-year note surging back above 1.6 percent to its highest levels in over a year.

The increase in yields comes after President Joe Biden directed states to make all adults eligible for a coronavirus vaccine by May 1st.

The vaccine news combined with the new $1.9 trillion stimulus package has generated optimism about the economic outlook, reducing the appeal of bonds. Bond yields move in opposite direction to prices.

Yields saw further upside following the release of a report from the University of Michigan showing U.S. consumer sentiment improved by much more than expected in the month of March.

The University of Michigan said its consumer sentiment index jumped to 83.0 in March after dipping to 76.8 in February. Economists had expected the index to inch up to 78.5.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 89.1 in March of 2020.

A separate report released by the Labor Department released showed U.S. producer prices increased in line with economist estimates on the month of February.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in February after spiking by 1.3 percent in January. The price growth matched expectations.

Excluding prices for food, energy, and trade services, core producer prices edged up by 0.2 percent in February following a 1.2 percent jump in January.

The report also showed the annual rate of growth in producer prices surged up to 2.8 percent in February from 1.7 percent in January.

Core producer prices in February were up by 2.2 percent compared to the same month a year ago, reflecting an uptick from the 2.0 percent growth in January.

Software stocks have shown a significant move to the downside on the day, dragging the Dow Jones U.S. Software Index down by 2 percent.

Considerable weakness is also visible among gold stocks, as reflected by the 1.5 percent drop by the NYSE Arca Gold Bugs Index.

The weakness in the gold sector comes amid a steep drop by the price of the precious metal, with gold for April delivery tumbling $19.90 to $1,702.70 an ounce.

Housing, biotechnology and steel stocks are also seeing notable weakness, giving back ground following the strength seen in the previous session.

On the other hand, banking stocks have shown a strong move to the upside on the day, driving the KBW Bank Index up by 2.1 percent to a record intraday high.

Airline stocks have also moved significantly higher on the day, resulting in a 1.6 percent jump by the NYSE Arca Airline Index.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged up by 1.7 percent, while China’s Shanghai Composite Index rose by 0.5 percent.

Meanwhile, the major European markets have turned mixed on the day. While the German DAX Index is down by 0.4 percent, while the French CAC 40 Index is up by 0.1 percent and the U.K.’s FTSE 100 Index is up by 0.3 percent.

In the bond market, treasuries have moved notably lower after ending the previous session little changed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 10.8 basis points at 1.635 percent.