Wall Street ended mixed on Wednesday as rising US Treasury yields and concerns over potential universal tariffs under President-elect Donald Trump weighed on market sentiment.
The S&P 500 rose 0.16% to close at 5,918.25, while the Dow Jones Industrial Average gained 0.25% to end at 42,635.20. However, the Nasdaq Composite slipped 0.06%, settling at 19,478.88. Gains in healthcare, materials, and industrial stocks were offset by losses in communication services and energy.
The benchmark 10-year US Treasury yield climbed to 4.73%, its highest level since April 2024, before settling at 4.687%. This continued surge in yields has pressured equity markets as investors reassess expectations for Federal Reserve rate cuts in 2025.
Adding to the uncertainty, reports emerged that Trump might declare a national economic emergency to justify new tariffs on both allies and adversaries. Analysts highlighted the inflationary impact of such policies, with Bill Strazzullo, Chief Market Strategist at Bell Curve Trading, noting that rising rates reflect concerns over inflationary risks tied to Trump's agenda.
The US dollar index gained 0.29%, rising to 109.02, while the euro weakened by 0.23% to US$1.0315. Meanwhile, oil prices fell due to a stronger dollar and rising US fuel inventories. Brent crude dropped 89 cents to US$76.23 per barrel, and West Texas Intermediate crude declined 93 cents to US$73.32 per barrel.
Gold, however, saw gains as spot prices rose 0.51% to US$2,662.90 per ounce, while US gold futures settled 0.3% higher at US$2,672.40.Investors are now looking ahead to Friday's non-farm payrolls data for further insights into labour market conditions, which could influence the Federal Reserve's monetary policy direction.
European shares dipped, with the STOXX 600 falling 0.2% as government bond yields in the region surged. German 10-year bund yields hit a six-month high, while UK 10-year gilt yields climbed to 4.82%, their highest level since 2008.
With rising yields and economic uncertainty, market watchers like Mark Malek, Chief Investment Officer at SiebertNXT, warned that elevated bond yields could dampen investor appetite for equities in the coming months.
