UNITED STATES NEWS

Stock market today: Asian shares mostly decline after Wall Street drop on higher bond yields

Aug 16, 2023, 10:11 PM | Updated: Aug 17, 2023, 10:10 pm

TOKYO (AP) — Asian shares mostly slipped Friday as rising yields in the bond market on Wall Street set off expectations that high interest rates would continue in the U.S.

Japan’s inflation data showed consumer prices rose 3.1% from a year earlier in July, down from 3.3% in June. But that was still higher than the 2.5% forecast by some analysts, and above the Bank of Japan target at 2%.

The core CPI, which eliminates energy and fresh food prices from the measure, rose 4.3% on year, according to the government Ministry of Internal Affairs and Communications.

Japan’s Nikkei 225 slipped nearly 0.2% in morning trading to 31,565.21. Australia’s S&P/ASX 200 added 0.1% to 7,155.00. South Korea’s Kospi shed 0.5% to 2,506.56. Hong Kong’s Hang Seng dropped 1.2% to 18,110.52, while the Shanghai Composite edged down nearly 0.1% to 3,161.97.

Also on investors’ minds is what appears to be China’s shaky recovery from the negative economic effects of the coronavirus pandemic.

“In terms of China, there has been very little cause for optimism due to the dire macro indicators, a plunging yuan and property developers hitting troubled waters,” said Tim Waterer, chief market analyst at KCM Trade.

Wall Street fell for a third straight day, with the S&P 500 sinking 33.97, or 0.8%, to 4,370.36. August is on track to be its worst month of the year by far.

The Dow Jones Industrial Average dropped 290.91 points, or 0.8%, to 34,474.83, and the Nasdaq composite fell 157.70, or 1.2%, to 13,316.93.

The losses were widespread. Some of the hardest hit were high-growth stocks seen as the most vulnerable to higher interest rates. Meta Platforms sank 3.1%, and Tesla dropped 2.8%. Apple fell 1.5% and was the heaviest weight on the S&P 500.

Stocks broadly have been retreating in August following a torrid first seven months of the year. That’s in part because a swift rise in bond yields is forcing a reassessment of how much to pay for stocks.

The 10-year Treasury, which is the centerpiece of the bond market, is now yielding 4.28% after touching its highest level since October.

If it reaches 4.34%, it will be at a level unseen since 2007, according to Tradeweb. That’s before the financial crisis and Great Recession caused yields to collapse to record lows. The 10-year Treasury was yielding less than 0.70% three years ago.

Higher yields are good for bond investors, who get fatter payouts for their investments. But it hurts stock prices because investors are suddenly less inclined to pay high prices for investments that aren’t as steady as bonds.

Higher yields also mean borrowers have to pay more to get cash, which can crimp corporate profits and cause unforeseen things to break in the system, like the three high-profile U.S. bank failures that shook markets this spring.

Homebuyers are feeling the sting. The average rate on a 30-year mortgage hit its highest level this week in more than 20 years.

Yields have been on the rise as more reports show the U.S. economy remains remarkably resilient. On the upside for markets, the data means the economy has been able to avoid a long-predicted recession. But on the downside, it could also keep upward pressure on inflation. That would give the Federal Reserve reason to keep interest rates higher for longer.

More data came in Thursday showing a firm U.S. economy.

Fewer workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market continues to be solid.

A survey of manufacturers in the mid-Atlantic region also unexpectedly showed growth, when economists were expecting another month of contraction. Manufacturing has been one of the areas of the economy hit hardest by much higher interest rates.

“The labor market continues to be resilient—maybe too resilient for the Fed’s liking,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

Other strong economic data recently, including a report showing an acceleration in sales growth at U.S. retailers, mean the Fed could hike interest rates again at some point, he said. Hopes had been rising on Wall Street that the Fed could be done after it raised its main rate last month to the highest level in more than two decades.

Traders had also been hoping the Fed would begin cutting rates early next year. Such a move would be a relief for markets because high rates work to lower inflation by slowing the entire economy and hurting prices for investments.

Inflation has cooled considerably from its peak above 9% last summer. But consumers still paid prices that were 3.2% higher in July than a year earlier, and economists say the last stretch to get inflation down to the Fed’s 2% target may prove to be the most difficult.

A stronger economy would burn more fuel, and oil prices rose Thursday to recover some of their slide from earlier in the week. That helped propel stocks of energy producers to some of the rare gains within the S&P 500. Exxon Mobil rose 1.9%, and ConocoPhillips gained 1.8%.

In energy trading, benchmark U.S. crude gained 25 cents to $80.64 a barrel. Brent crude, the international standard rose 10 cents to $84.11 a barrel.

In currency trading, the U.S. dollar inched down to 145.37 Japanese yen from 145.83 yen. The euro cost $1.0891, down from $1.0873.

United States News

Associated Press

US makes offer to bring home jailed Americans Paul Whelan and Evan Gershkovich. Russia rejected it

WASHINGTON (AP) — The Biden administration has made a new and significant offer aimed at securing the release of American detainees Paul Whelan and Evan Gershkovich, but Russia has rejected the offer, the State Department said Tuesday. Spokesman Matthew Miller did not reveal the details of the offer nor why Russia had turned it down, […]

10 minutes ago

Actor Jonathan Majors arrives at court for his domestic assault trial, Tuesday, Dec. 5, 2023, in Ne...

Associated Press

Jonathan Majors’ accuser said actor’s “violent temper” left her fearful before alleged assault

NEW YORK (AP) — Jonathan Majors’ former girlfriend told a Manhattan jury that the actor was prone to fits of rage that escalated in the months leading up to his arrest for allegedly attacking her in the backseat of a car last spring. During hours of tearful testimony on Tuesday, Grace Jabbari described Majors as […]

29 minutes ago

Associated Press

Atmospheric river brings heavy rain, flooding and warm winter temperatures to the Pacific Northwest

PORTLAND, Ore. (AP) — An atmospheric river has brought heavy rain, flooding and warm winter temperatures to the Pacific Northwest, closing roadways and schools as it shattered daily rainfall and temperature records in Washington state. The National Weather Service on Tuesday issued flood warnings in parts of western Washington, including in areas north and east […]

53 minutes ago

This undated family photo shows David Schultz with his two sons. Schultz’s semi-truck was found t...

Associated Press

Midwest mystery: Iowa man still missing, 2 weeks after semi holding baby pigs was found on highway

DES MOINES, Iowa (AP) — David Schultz’s semi-truck was found two weeks ago on a rural highway in northwest Iowa, its trailer still filled with baby pigs he was transporting. Schultz’s wallet and phone were inside, and his jacket was on the side of the road. But Schultz was nowhere to be found, and his […]

1 hour ago

FILE - Sen. Tommy Tuberville, R-Ala., listens to a question during a news conference, March 30, 202...

Associated Press

Sen. Tommy Tuberville says he’s ending blockade of most military nominees

WASHINGTON (AP) — Sen. Tommy Tuberville of Alabama said Tuesday he’s ending his blockade of most military nominees, clearing the way for hundreds to be approved. Follow @ktar923

1 hour ago

Associated Press

Former DEA informant pleads guilty in 2021 assassination of Haiti’s president

MIAMI (AP) — A former confidential informant for the U.S. Drug Enforcement Administration pleaded guilty Tuesday to conspiring to assassinate Haitian President Jovenel Moïse, whose killing in 2021 caused unprecedented turmoil in the Caribbean nation. Joseph Vincent, a dual Haitian-American citizen who lived in the U.S. and attended meetings in South Florida and Haiti ahead […]

2 hours ago

Sponsored Articles

Follow @KTAR923...

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

Follow @KTAR923...

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

...

DAY & NIGHT AIR CONDITIONING, HEATING AND PLUMBING

Importance of AC maintenance after Arizona’s excruciating heat wave

An air conditioning unit in Phoenix is vital to living a comfortable life inside, away from triple-digit heat.

Stock market today: Asian shares mostly decline after Wall Street drop on higher bond yields