U.S. Stocks Turn Lower as Treasury Yields Inch Higher

Barry Adams
29 May, 2024
New York City

Stocks and benchmark indexes slipped in early trading on Wednesday, and the yield on U.S. Treasury notes advanced for the second day in a row. 

The S&P 500 index and the Nasdaq Composite edged down 0.2%, and megacap technology stocks struggled near recent levels. 

Nvidia attempted to extend gains after rising more than 20% following the company's earnings report last week, which exceeded the most optimistic outlook. 

Investors are betting that the company at the center of the artificial intelligence technology wave is likely to continue to deliver earnings growth that is ahead of market expectations as the large data center operators ramp up the purchase of servers with advanced chips. 

Most investors are anticipating Nvidia to deliver at least $23 per share in earnings in the fiscal year ending in January 2025, and the AI chipmaker's earnings in the next fiscal year could range between $30 and $36 per share. 

The bond market sold off after the Treasury Department auction for 2-year and 5-year notes fell short of expectations, driving the yield on 10-year Treasury notes above the critical level of 4.5%. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index fell 0.7% to 5,286.19, and the Nasdaq Composite dropped 0.9% to 16,731.52. 

The yield on 2-year Treasury notes edged higher to 4.97%, 10-year Treasury notes increased to 4.57%, and 30-year Treasury bonds edged lower to 4.59%.

WTI crude oil increased $0.09 to $80.37 a barrel, and natural gas prices eased 6 cents to $2.77 a thermal unit.

Gold decreased by $16.75 to $2,343.14 an ounce, and silver fell 9 cents to $31.96. 

The dollar index, which weighs the U.S. currency against a basket of foreign currencies, edged lower to 104.73.

 

U.S. Stock Movers

Chewy jumped 6.5% to 18.0 after the online pet food store reported better-than-expected quarterly results. 

Marathon Oil jumped 8.3% to $28.64 after the company agreed to be acquired by ConocoPhillips for $17.1 billion and assume $5.4 billion in debt. 

Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7% premium to the closing share price of Marathon Oil on May 28, 2024, and a 16.0% premium to the prior 10-day volume-weighted average price.

The deal is expected to be immediately attractive to ConocoPhillips shareholders. 

After the transaction, the third-largest U.S. oil company plans to increase its dividend by 34% to 78 cents per share starting in the fourth quarter of 2024. 

Upon closing of the transaction, ConocoPhillips expects share buybacks to be over $20 billion in the first three years, with over $7 billion in the first full year, at recent commodity prices.

The oil industry has experienced a wave of transactions in recent months. Exxon Mobil agreed to acquire Pioneer Natural Resources for $60 billion, and Hess' shareholders approved the merger of the company with Chevron.