S&P 500 and Nasdaq Composite Extended Losses After Treasury Yields Jumped to 15-year Highs

Barry Adams
21 Sep, 2023
New York City

Market averages extended weekly losses and Treasury yields jumped to multi-year highs after the Federal Reserve signaled rates are likely to stay higher for a longer time. 

Market averages declined after weekly jobless claims indicated strong labor market conditions, suggesting that policymakers may opt for another rate hike at the next meeting.

Initial jobless claims for the week ending September 16 declined 20,000 to 201.,000, the Department of Labor reported  Thursday. 

The initial jobless claims were the lowest since January, and continuing claims decreased 21,000 to an eight-month low of 1.662 million, suggesting unemployed workers are able to find new jobs in relatively shorter duration. 

Treasury yields jumped to multi-year highs as investors adjust to higher interest rate scenario and the U.S. economy is likely to avoid a recession in 2023. 

The yield on 2-year Treasury notes jumped to a level since 2007 and 10-year Treasury notes reached the highest level in 15 years after the release of weekly jobless report. 

 

U.S. Indexes & Yields 

The S&P 500 index declined 0.8% to 4,363.74 and the Nasdaq Composite decreased 1.0% to 13,332.16. 

The yield on 2-year Treasury notes hovered at 5.17%, 10-year Treasury notes inched higher to 4.47% and 30-year Treasury bonds edged up to 4.52%. 

Crude oil increased $0.80 to $90.47 a barrel and natural gas prices declined 1 cent to $2.77 a thermal unit. 

The dollar index edged higher to 105.58, the level last seen in March and extended gains from the low of 99.85 on July 13. 

 

U.S. Stock Movers 

Klaviyo Inc decreased 1.7% to $32.21 after the company completed its initial public offering and sold 19.2 million shares at $30 each, 

The stock of the marketing software automation company opened at $36.75 and closed at $32.76, about 9% higher than its price.

KB Home declined 4% to $46.10 despite the home builder reporting quarterly results that met investor expectations. 

Revenue in the fiscal third quarter ending in August fell to $1.59 billion from $1.84 billion and the delivered homes declined 7% to 3,375 from a year ago. 

Higher mortgage rates negatively impacted home prices and average selling price in the quarter declined to $466,300 compared to $508,700 a year ago. 

The home building operating income margin declined to 11.3% from 17.7% and housing gross profit margin fell 520 basis points to 21.5%. 

Net income declined to $149.9 million from $255.3 million and diluted earnings per share and diluted earnings per share fell to $1.80 from $2.86 a year ago. 

Starbucks Corp decreased 25 cents to $94.94 after the company said announced to hike its quarterly dividend by 7.5% to 57 cents a share from 53 cents payable on November 24 to shareholders on record November 10. 

The coffee retailer opened a $220 million distribution and manufacturing facility in China, second largest market for the company. 

Darden Restaurants, Inc fell 1.5% to $147.72 after the company said same store sales at its comparable fine dining locations declined 2.8% in the fiscal first quarter ending on August 27. 

Consolidated comparable sales increased 5% driven by rise of 6.0% at Olive Garden stores and 8.1% jump at Long Horn Steak House locations.  

Revenue in the quarter increased to $2.7 billion from $2.4 billion and net income rose to $194.5 million from $193 million and diluted earnings per share rose to $1.59 from $1.56 a year ago. 

The company declared a dividend of $1.31 a share payable on November to shareholders on record on October 10. 

During the quarter, the company repurchased 0.9 million shares for a total of $143 million, and at the end of the quarter $509 million were still available in its $1 billion stock repurchase program.