Wall Street closes near flat as Treasury yields surge

NEW YORK, (Reuters): US stocks closed little changed on Thursday after a choppy trading session, as investors weighed another rise in Treasury yields with the latest batch of economic data and earnings.

The benchmark US 10-year Treasury yield rose as high as 4.198 per cent during the session, the highest since November, extending its climb from a day earlier following Fitch’s downgrade of the top-tier US credit rating. In late afternoon trade, the 10-year yield had dipped below 4.194.

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“It’s really relative to just pricing against bond yields”, said Tom Hainlin, national investment strategist at US Bank Wealth Management in Minneapolis. “Higher yield on 10-year treasuries, … has challenged the attractiveness of stocks.”

A Labor Department report showed the number of Americans filing new claims for unemployment benefits increased slightly last week, while layoffs dropped to an 11-month low in July as labor market conditions remain tight.

Investors were waiting for July’s jobs report, due on Friday.

Another report showed the US services sector slowed in July, but businesses faced higher prices for inputs as demand continued to hold up. Richmond Federal Reserve President Thomas Barkin said US inflation remained too high, although recent readings indicated price pressures easing.

The Dow Jones Industrial Average (.DJI) fell 66.63 points, or 0.19 per cent, to 35,215.89, the S&P 500 (.SPX) lost 11.5 points, or 0.25 per cent, to 4,501.89 and the Nasdaq Composite (.IXIC) dropped 13.73 points, or 0.1 per cent, to 13,959.72.

Eight of the eleven main S&P 500 sectors declined, with more interest rates sensitive Utilities(.SPLRCU) and Real Estate (.SPLRCR) leading losses, dropping 2.3 per cent and 1.4 per cent respectively.

After the closing bell, Amazon.com(AMZN.O) shares surged when the online retailer forecast third-quarter revenue above Wall Street expectations, boosted by its Prime Day sale event in July that drew price-conscious consumers to its platform.

Apple (AAPL.O) shares dipped less than 1 per cent in extended trade after the iPhone maker reported quarterly results that beat forecasts.

Second-quarter earnings for companies in the S&P 500 are now expected to fall 5 per cent from a year earlier, according to Refinitiv data.

Qualcomm (QCOM.O) shares dropped 8.2 per cent after a gloomy forecast signaled more pain for the biggest maker of smartphone chips from the ongoing slump in the consumer electronics market.

PayPal Holdings (PYPL.O) tumbled 12.3 per cent as investors were disappointed by the payments firm’s quarterly operating margin, even as executives said they expect improvement.

U.S. travel stocks fell on downbeat quarterly reports from Spirit Airlines (SAVE.N) and Expedia (EXPE.O) that amplified concerns domestic demand may be easing after a strong rebound from pandemic lows.

Volume on US exchanges was 12.08 billion shares, compared with the 10.5 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.84-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.

The S&P 500 posted 14 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 58 new highs and 88 new lows.