Rise in Yields Rattles Markets…..

U.S. equites finished well entrenched in the red and near the lows of the day amid a sharp increase in Treasury yields which applied pressure to growth-oriented issues, notably the Information Technology sector. Conversely, the rise in rates gave the Financials sector a boost, as the rate on the 10-year note hit a 14-month high. The rise in yields comes despite the Federal Reserve indicating yesterday that rates will likely remain intact through 2023, as concerns remain that the Fed may be losing control of the yield curve, which added to the dampened sentiment. Treasuries were weaker as a result, the U.S. dollar moved higher, while gold fell, and crude oil prices were sharply lower. In economic news, initial jobless claims rose more than forecasts and the Leading Index notched its tenth-straight monthly gain, while manufacturing activity in the Philadelphia region soared. Meanwhile, corporate news focused on some earnings results out of the retail space, as shares of Dollar General fell after it missed forecasts and offered lackluster guidance, while Williams Sonoma posted upbeat quarterly results to the betterment of its shares. Asia finished mostly higher amid optimism following yesterday’s Fed decision, while markets in Europe saw gains following the Bank of England’s decision to keep its policy intact.

The Dow Jones Industrial Average fell 153 points (0.5%) to 32,862, the S&P 500 Index declined 59 points (1.5%) to 3,916, and the Nasdaq Composite plunged 409 points (3.0%) to 13,116. In heavy volume, 1.1 billion shares were traded on the NYSE and 5.6 billion shares changed hands on the Nasdaq. WTI crude oil tumbled $4.57 to $60.06 per barrel. Elsewhere, the Bloomberg gold spot price moved $11.41 lower to $1,733.92 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.5% at 91.89.

Jobless claims higher than expected, Philly manufacturing skyrockets, LEI rises…..

Weekly initial jobless claims came in at a level of 770,000 for the week ended March 13, north of the Bloomberg estimate of 700,000, and compared to the prior week’s upwardly revised 725,000 level. The four-week moving average shed 16,000 to 746,250, and continuing claims for the week ended March 6 fell by 18,000 to 4,124,000, above estimates of 4,034,000. The four-week moving average of continuing claims declined by 99,000 to 4,255,500.

The Philly Fed Manufacturing Business Outlook Index rose by a far larger amount than expected and remained solidly in expansion territory (a reading above zero) for March. The index soared to 51.8, its highest level since April 1973, versus estimates of a slight increase to 23.3 from February’s 23.1 level. There was growth in all components of the index, most notably in new orders and prices paid.

The Conference Board’s Index of Leading Economic Indicators (LEI) for February rose 0.2% month-over-month (m/m), slightly below the Bloomberg consensus estimate calling for an increase of 0.3%, and compared to January’s unrevised 0.5% gain. The LEI was positive for the tenth-straight month after the plunges in March and April, due to positive net contributions from ISM new orders, stock prices, credit, the interest rate spread and jobless claims, which more than offset weakness in average workweek and building permits.

Treasuries were lower, as the yield on the 2-year note was up 3 basis points (bps) at 0.16%, the yield on the 10-year note was 8 bps higher at 1.71%, and the 30-year bond rate increased 4 bps to 2.48%.

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