Stock Indexes Traded Higher, Bond Yields Jumped to 3-month Highs

Barry Adams
28 Feb, 2023
New York City

Market indexes extended day's gains as Treasury yields inched higher and crude oil was in focus.  

Investors reacted to the latest batch of earnings from retailers, restaurants and tech companies and reviewed the rising bond yields. 

Retailer Target Corp struggled to control costs but higher discounts lured customers back in search of bargains as prices of essential goods continue to rise but at a slower pace. 

Zoom Video reported a sharp plunge in earnings and sales growth after the pandemic-era boom began to fade but the number of companies paying more than $100,000 a year continued to rise. 

Movement in Treasury yields also impacted stock market sentiment after shorter term debt traded above 5% and 10-year Treasury yield also touched a 3-month high. 

 

Indexes and Yields 

The S&P 500 index increased 0.4% to 3,996.91 and the Nasdaq Composite index added 0.7% to 11,541.80. 

U.S. Treasury yields increased and extended gains in February as traders come to terms with the prospects of higher rates staying longer and recalibrate expectations.

The yields on 10-year Treasury notes traded at a 3-month high and shorter term debts of six months or one-year duration stayed firmly above 5%.     

The yield on 2-year Treasury notes increased to 4.70%, 10-year Treasury notes edged higher to 3.93% and 30-year Treasury bonds hovered near 3.94%.  

 

Energy Prices Extend Annual Losses 

Crude oil traded higher and the commodity is set to decline less than 1.5% in February and fall 23% over the last twelve months. 

Traders are looking for a demand surge from China as refiners accelerate reopening to meet the rising demand for transportation fuel.

Natural gas futures edged higher but the fuel is set to fall more than 2.5% in February and extend loss to 41% over the last twelve months. 

Demand for natural gas has been weak amid warm weather conditions and the LNG export terminal in Freeport, Louisiana is not expected to reopen before mid-March.  

Crude oil increased $1.60 to $77.29 a barrel and natural gas fell 9 cents to $2.63 a thermal unit. 

 

U.S. Movers 

Target Corporation increased 2.8% to $171.46 after the retailer reported a weak sales increase and earnings fell on higher costs and the company issued a cautious outlook.

Target Corporation said revenue in the fourth quarter increased 1.2% to $30.9 billion but net income plunged 43% to $876 million and diluted earnings per share dropped to $1.89 from $3.21 a year ago. 

In full-year 2022, revenue increased 2.8% to $107.6 billion and net income plunged 60% to $2.8 billion from $6.9 billion and diluted earnings per share dropped to $5.98 from $14.10 a year ago. 

Comparable sales in the quarter increased 0.7% on top of 8.9% and advanced 2.2% on top of 12.7% in 2021. Comparable traffic in 2022 increased 2.1% on top of 12.3% in the previous year.  

Zoom Video Communications increased 1.8% to $75.03 after the company reported better-than-expected earnings and sharp decline in sales growth. 

Zoom Video Communications said revenue in the fourth quarter increased 4% to $1.1 billion and the company swung to a net loss of $104.4 million from a profit of $490.5 million. 

The earnings per share was a loss of 36 cents compared to a profit of $1.60 a year ago. 

Revenue in the fiscal year ending in January increased 7.0% to $4.4 billion and net income dropped to $103.7 million from $1.4 billion and diluted earnings per share dropped to 34 cents from $4.50 a year ago.