Stocks Slip at the Open: Bond Yields Continue Their Ascent

As the market opens, stocks are taking a dip, with the S&P 500 down 0.5% and the Dow Jones Industrial Average falling by 0.4%. This comes as bond yields continue their upward trajectory, with the 10-year Treasury yield reaching 4.73% on Wednesday, its highest level since April 2024. The yield held steady on Thursday ahead of the highly anticipated release of the December jobs report on Friday.



The rise in bond yields has put pressure on stocks and other financial markets that are sensitive to the possibility of interest rates staying higher for longer. However, stocks have managed to hold their ground despite the increase in yields. The S&P 500 closed about 2.8% below its all-time high on Wednesday, but it is still up more than 5% since yields began climbing in mid-September.

The recent rise in bond yields has sparked some debate about whether stocks are in store for another correction. While a correction is always possible, current conditions do not suggest a major pullback is imminent. The U.S. economy is expected to continue growing at a considerable clip this year, and most bear markets coincide with recessions. Additionally, most big drawdowns in stocks occur when there is a slowdown in growth and a pivot back to rate hikes by the Federal Reserve.

However, investors should remain vigilant and monitor the situation closely. If signs of a slowdown emerge or rate hikes move back on the table, the historic precedents show that equities are capable of a notable decline, even without a recession.

In conclusion, while the rise in bond yields has put some pressure on stocks, the overall market remains resilient. Investors should continue to monitor the situation closely and be prepared to adjust their portfolios as needed. As always, it is essential to maintain a diversified portfolio and stay informed about the latest market developments.

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