Treasury Yields Put Pressure on Stocks Again

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US markets start the year in the red
US stocks started the year in a bearish mood, with all major indices fall on Thursday, giving up earlier gains. He us dollar index reached its highest level in more than two years. The pan-European Stoxx 600 the index added 0.6%, reverse previous losses. Oil and gas stocks led the gains, rising 2.3%, although the European banking index lost 0.3%.

Tesla deliveries reverse gains
Actions of tesla fell 6.1% after the company reported that total deliveries in the fourth quarter of 2024 fell year after year. Not only was it Tesla’s first annual drop in deliveries, but the figure was also below expectations, according to a consensus estimate compiled by StreetAccount. Deliveries are the closest approximation to Tesla’s reported sales.

Meta’s new president of global affairs
Goal is replacing its president of global affairs, Nick Clegg, a former British deputy prime minister, with Joel Kaplan, the company’s current vice president of policy and a former Republican Party staffer. It is a sign of what technology companies are like. positioning for the next administration of US President-elect Donald Trump in Washington.

Russian gas stops flowing
Ukraine stopped the flow of Russian gas to several European countries on New Year’s Day in a widely expected movethe Russian state energy giant Gazprom confirmed On Wednesday. The European Commission saying It had been working to ensure the 27-nation bloc was prepared for such a scenario, although some countries are more at risk than others.

(PRO) Feeling close to the level of euphoria
Investor optimism has only grown despite the difficult end of December. A barometer followed by bank of america indicates that investor sentiment is close to the euphoria level, but that is, on the contrary, a signal to sell. Savita Subramanian, quantitative and equity strategist at the bank, explains what that means for investors.

He Dow Jones Industrial Average fell 0.36%, the S&P 500 fell 0.22% and the Nasdaq Composite lost 0.16%. Its loss on Thursday means the S&P and Nasdaq have closed lower for five consecutive sessions, their longest losing streaks since April.

The likely culprit? Rising Treasury bond yields. After initial immersion, the 10-Year Treasury Yield began to rise and, at 12:00 US time, was close to touching 4.6%. That coincided with the moment when stocks began to decline: the S&P 500 lost about 60 points between 12 p.m. and 1 p.m.

Although the 10-year yield finally stabilized by the end of the day, persistently high yields are a threat to stocks because they represent a safer avenue where investors can stash their cash. When Treasuries can offer a guaranteed 4.6% return, the risk of betting on stocks seems less attractive.

Treasuries could be even more attractive this year because analysts don’t expect the S&P to come close to its 23.31% gain in 2024. It’s more likely to gain 9% in 2025, on average, according to the CNBC Market Strategists Survey released in December.

In that context, stocks may not adequately compensate investors for the risk they take in relation to owning bonds.

Like Max Kettner, HSBC The chief multi-asset strategist wrote in a note on Thursday: “The Fed’s hawkish turn causes a further rise in yields, triggering what we call the Danger Zone.”

That said, Kettner believes the current market turmoil “should create attractive entry points given that fundamentals are still on solid footing; we believe (the first half of 2025) will bring a suitable backdrop for Goldilocks.”

Even a road to the danger zone must lead beyond it to another destination.

— CNBC’s Lisa Kailai Han, Sarah Min, Jesse Pound and Christina Cheddar Berk contributed to this report.