Stocks close higher, led by gains for tech; bond yields drop
Wall Street capped a day of choppy trading Wednesday with more record highs for stocks and another drop in bond yields that sends mixed signals about investors’ confidence in the market.
The Standard & Poor’s 500 recovered from an early stumble and rose 0.3% to an all-time high. The benchmark index snapped a seven-day winning streak of high closes a day earlier. The Nasdaq composite also set a record high, its third straight.
Technology, industrial and healthcare companies accounted for a big share of the gains. Apple rose 1.8%, Otis added 2% and Biogen gained 3%. Those gains were kept in check by a slide in other sectors, including energy, which fell as oil prices dropped 1.6%.
The bond market continued to draw buyers, a trend that has pulled yields sharply lower this week despite economic data showing the economy continues to recover from the pandemic. The yield on the 10-year Treasury fell to 1.32% from 1.37% a day earlier.
The S&P 500 rose 14.59 points to 4,358.13. The Dow Jones industrial average added 104.42 points, or 0.3%, closing at 34,681.79; the Nasdaq inched up 1.42 points, or less than 0.1%, to 14,665.06. The Russell 2000 index of smaller stocks slid 21.66 points, or 1%, to 2,252.85.
Stock indexes and Treasury yields had little reaction to the minutes from the June meeting of Federal Reserve policymakers, which showed Fed officials discussed the timing of reducing bond purchases that they have used to keep longer-term interest rates in check.
The discussions signal that the Fed is moving closer to a decision to taper those purchases, though most analysts don’t expect a reduction until late this year. After the last meeting, Fed policymakers said they planned to raise interest rates as soon as 2023, which was sooner than the market expected.
The yield on the 10-year Treasury sank as low as 1.28% on Wednesday, down from its perch above 1.75% in March. A month ago, it was trading around 1.62%. The last time bond yields moved lower so quickly was in March 2020 when the pandemic effectively shut down the U.S. economy.
Lower bond yields can be good for many parts of the economy. Mortgage rates are tied closely to bond yields, and government borrowing costs fall when the cost of issuing bonds decreases.
Longer-term yields tend to move along with investors’ expectations for inflation and economic growth, and both are still very strong and much higher than they’ve been in recent years. But investors on Wall Street increasingly suspect they’ve already topped out as the economy moves past the initial catapult phase of its recovery from the pandemic.
A report on Tuesday showed that growth in the U.S. services industry slowed last month, for example, and by more than economists expected.
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