US Stocks traded modestly lower after a steeper drop earlier weighed down by a global bond selloff and Greece’s precarious financial situation.
In early morning trading, the yields for the ten year US treasury bond, the benchmark for global borrowing costs, shot up to their highest since late November.
The bonds shot by as much as 2.355% before stabilizing at 2.27% to spark concern among investors that the borrowing costs could rise causing a drag on economic growth.
“The bond sell-off is knocking the wind out of equities,” Peter Cardillo, chief market economist at Rockwell Global Capital in New York, told Reuters.
“With bond yields moving up, this could be the catalyst for the market to correct.”
Wall Street has been trading at record expensive valuation supported by rock bottom borrowing costs.
The bump in yield started earlier this month partly on fears that the Federal Reserve would raise the country’s interest rates, a sharp growth in government yields in Germany and a drop in global deflating concerns.
The Dow Jones Industrial Average pared steep losses in early morning trading to trade 41 points or 0.2% lower at 18,063.5 points. The blue chip index was down by as much as 170 points immediately after the opening bell.
The S&P 500 Index slipped by 13 points or 0.6% at 2091 points in mid morning trading. Nine of its ten key sectors were trading lower on the day with energy bucking the selloff to trade modestly higher on a gain in crude prices.
The technology-heavy Nasdaq Composite dipped 20 points or 0.4% at 4973 points.
“The market is breaking off international news and looking to find itself right now,” Stephen Carl, head equity trader at Williams Capital Group, told the Wall Street Journal.
“Trading volumes in U.S. equities were modest by midday and I have no idea which way the market will go.”
To contact the reporter of the story: Jonathan Millet at firstname.lastname@example.org