Tech Stocks Rebound Lift U.S. Markets, 10-year Treasury Yields Jump to 16-year High

Barry Adams
21 Aug, 2023
New York City

Stocks rebounded on the first day of a new week after tech stocks led gainers. 

Market indexes traded higher after falling for three weeks in a row, largely because of rate hike worries and uneven economic rebound in China. 

Those worries were in full display after the U.S. Treasury yields advanced to new 9-month highs and the yield on 10-year Treasury bonds jumped above 5% for the first time since October and traded at a high not seen since 2007. 

On Sunday, the People's Bank of China, Chinese stock market regulator and the agency of the finance ministry together announced the government's intention to offer more financial and regulatory reforms without specifics. 

U.S. stocks have been under pressure for the last week after the market rally driven by a narrow list of tech stocks hit valuation worries and rate path longer-for-high rate worries resurfaced. 

Investors are recalibrating their views on the economy, labor market and the Fed's policy stance. 

Despite the cooling of inflation, core inflation which excludes food and energy, is significantly higher than the Fed's preferred 2% level. 

Investors are divided if the Fed's current stance of lifting rates in 25 basis points increment will bring down inflation to 2%, as most economists forecast a mild and short recession because of strong labor  market conditions.

 

U.S. Indexes & Yields 

The S&P 500 index traded up 0.5% to 4,389.97 and the Nasdaq Composite gained 1% to 13,430.29.  

The yield on 2-year Treasury notes increased to 5.0%, 10-year Treasury notes inched higher to 4.33% and 30-year Treasury bonds edged down to 4.48%. 

Crude oil increased $1.86 to $79.11 a barrel and natural gas prices increased 5 cents to $2.60 a thermal unit. 

 

U.S. Stock Movers 

Palo Alto Networks Inc jumped 14.5% to $242.84 after the cyber security and network infrastructure company reported better-than-expected quarterly results. 

VMware Inc jumped 4.2% to $161.28 after Broadcom said it got the UK's Competition and Market Authority gave its final approval of the purchase of the cloud computing company. 

Broadcom Inc jumped 2.4% to $845.25. 

Earthstone Energy Inc soared 13.8% to $18.42 after the company agreed to be acquired by  Permian Resources in an all-stock deal that valued the company at $4.5 billion, including the company's debt. 

Each share of Earthstone common stock will be exchanged for 1.446 shares of Permian Resources common stock.