Stocks fell Thursday as Treasury yields popped to multiyear highs and investors grew worried that lawmakers would be unable to prevent a shutdown.
The Dow Jones Industrial Average dropped 370.46 points, or 1.08 per cent, to close at 34,070.42. The S&P 500 slid 1.64 per cent to 4,330. The Nasdaq Composite retreated 1.82 per cent to 13,223.98.
It was the third straight day of losses for the three indexes and the worst session since March for the S&P 500. The Dow and S&P 500 were on track to end the week down more than 1 per cent and 2 per cent, respectively, while the Nasdaq was poised to fall more than 3 per cent.
The US 10-year Treasury yield hit a high of 4.494 per cent. Earlier in the day, the rate reached its highest level since 2007, with the latest catalyst being weekly jobless claims data showing a still strong labor market that could encourage the Fed to stay in hiking mode.
Weekly jobless claims decreased by 20,000 to 201,000 for the week ending Sept. 16, much lower than the 225,000 claims expected by economists polled by Dow Jones. It was the lowest volume of new unemployment claims since January.
The 2-year yield touched a high of 5.202 per cent, reaching levels not seen since 2006.
Losses intensified following news that House Republican leaders sent the chamber into recess on Thursday, bolstering fears that federal lawmakers won’t pass a bill to avert a government shutdown. Market participants are concerned that a shutdown would hurt fourth-quarter GDP.
In company-related news, tech shares have led the losses this week as investors rethink buying growth-oriented stocks if interest rates remain high. Tesla , Alphabet and Nvidia all lost more than 2 per cent. FedEx bucked the negative trend, gaining 4.5 per cent a day after the delivery company posted adjusted earnings of $4.55 per share in its fiscal first quarter, while analysts called for $3.73 per share, per LSEG.
Cisco Systems agreed to buy Splunk in a deal valued at about US$28 billion, representing its biggest acquisition yet and a massive push into software and artificial intelligence-powered data analysis.
The networking giant will pay US$157 a share in cash, the companies said in a statement Thursday, or a 31 per cent premium to Splunk’s closing price on Wednesday. The purchase represents roughly 10 per cent of Cisco’s market value.
In commodity-related news, the rally in uranium prices is expected to persist long-term, driven by the increasing global importance of nuclear power for cleaner energy and a projected doubling of global demand for uranium in nuclear reactors by 2040, with ongoing price increases expected for the next 10-20 years, fueled by a growing focus on energy security.
The price of wheat has recently dropped to nearly a three-year low due to Russia’s exceptional crop, but the potential for increased tensions in the Black Sea region and significant hedge fund bets pose a risk of a sudden price spike.
Hedge funds are increasingly investing in the oil market, anticipating that oil prices will surpass $100 per barrel soon, driven by production and export reductions from Saudi Arabia and Russia, including Riyadh’s extension of a 1 million barrel per day oil cut and Moscow’s export limitations, which have propelled Brent crude prices to $95 per barrel, marking a new high for the year.
Overall, all sectors closed lower overnight. Real Estate was the worst performer.
Lastly, it is worth noting, powerful media billionaire, Rupert Murdoch is retiring as chair of Fox and News Corp, concluding a decades-long era, with his elder son, Lachlan Murdoch, taking over as sole chair of News Corp while also maintaining his roles as executive chair and chief executive of Fox, effective mid-November, marking the end of a multi-decade journey during which Murdoch transformed a small Adelaide newspaper into a formidable global media empire with political clout spanning English-speaking nations.
Futures
The SPI futures are pointing to a 1.4 per cent fall.
Currency
One Australian dollar at 7:25 AM was buying 64.13 US cents.
Commodities
Gold lost 1.40 per cent. Silver fell 0.63 per cent. Copper dropped 2.12 per cent. Oil fell 0.03 per cent.
Figures around the globe
European markets closed lower. London’s FTSE fell 0.69 per cent, Frankfurt dropped 1.33 per cent, and Paris closed 1.59 per cent lower.
Turning to Asian markets, Tokyo’s Nikkei fell 1.37 per cent lower, Hong Kong’s Hang Seng lost 1.29 per cent while China’s Shanghai Composite closed 0.77 per cent lower.
The Australian sharemarket closed 1.37 per cent lower at 7,065
Ex-dividends
BSP Financial Group (ASX:BFL) is paying 13.6252 cents unfranked
Vita Life Sciences (ASX:VLS) is paying 3 cents fully franked
Dividends payable
AGL Energy Ltd (ASX:AGL)
Australian Finance Group Ltd (ASX:AFG)
Auswide Bank Ltd (ASX:ABA)
Beacon Lighting Group Ltd (ASX:BLX)
ClearView Wealth Ltd (ASX:CVW)
Eagers Automotive Ltd (ASX:APE)
Globe International Ltd (ASX:GLB)
GR Engineering Services Ltd (ASX:GNG)
Helloworld Travel Ltd (ASX:HLO)
Jumbo Interactive Ltd (ASX:JIN)
McMillan Shakespeare Ltd (ASX:MMS)
McPherson’s Ltd (ASX:MCP)
Meridian Energy Ltd (ASX:MEZ)
Michael Hill International Ltd (ASX:MHJ)
Pointsbet Holdings Ltd (ASX:PBH)
PWR Holdings Ltd (ASX:PWH)
QBE Insurance Group Ltd (ASX:QBE)
Schaffer Corp Ltd (ASX:SFC)
SDI Ltd (ASX:SDI)
Sky Network Television Ltd (ASX:SKT)
SkyCity Entertainment Group Ltd (ASX:SKC)
Smartgroup Corporation Ltd (ASX:SIQ)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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