Dow Jones falls almost 100 points after weak Treasury bond auction, ahead of Fed’s Powell remarks

How are stock trading

• Dow Jones Industrial Average
  DJIA
  was down 75 points, or 0.2%, at 34,035, after touching a session low of 33,951.87 in afternoon trade.

• S&P 500
  SPX
  fell 9 points, or 0.2%, at 4,373.

• The Nasdaq Composite
  COMP
  fell 25 points, or 0.2%, to 13,626.

On Wednesday, the S&P 500 rose for the eighth straight session, while the Nasdaq Composite rose for the ninth. For both indexes, it was the longest winning streak since November 2021, Dow Jones Market Data show.

What’s driving markets

The turnaround in stocks since the start of November lookin in jeopardy on Thursday, after a $24 billion sale of 30-year Treasury bonds drew weaker-than-expected demand.

Investors have been keeping a close eye on the Treasury market, with a sudden jump in yields on longer U.S. bonds in October viewed as a catalyst for recent weakness in equities.

But as yields retreated in November, the S&P 500 gained 6.5% during its eight-day winning streak, coinciding with the 10-year Treasury yield’s
BX:TMUBMUSD10Y
retreat from a 16-year peak around 5% to around 4.5% recently on signs of a cooling U.S. jobs market.

Thursday’s drop for the S&P 500 put a ninth-straight day in the green on the line. The last time the S&P 500 recorded such a long winning streak since Nov. 5, 2004, according to FactSet Data. What’s more, if the Nasdaq rises for what would be the 10th session, it would mark the tech-heavy gauge’s longest winning streak since an 11-day run that ended Nov. 8, 2021.

In One Chart: Rare stock-market event? Here’s how many times the S&P 500 has seen a 9-day winning streak in the last 95 years.

Over the past two weeks, falling Treasury yields, a weakening U.S. dollar and lower oil prices have helped to catapult stocks higher, said Art Hogan, chief market strategist at B. Riley Wealth.

But oil
CL00,
+1.62%
prices and yields on long U.S. government bonds were higher Thursday, while stocks were trading between small gains and losses.

“We entered November on the our back foot and clearly the biggest headwinds for stocks were rising Treasury rates, a stronger dollar and rising energy prices,” Hogan said during an interview with MarketWatch.

“All three of those have now reversed.”

Outside of the major indexes, the Russell 2000
RUT,
a gauge of small-cap stocks traded in the U.S., was 0.8% lower. Last week, U.S. stocks saw their biggest advance of the year.

Focus also was on any potential market-moving news Thursday from Federal Reserve Chairman Jerome Powell. Traders are eager to hear what Powell might have to say about this rapid pullback in Treasury yields since the Fed’s November policy meeting last week.

“Bottom line is that stocks and bond yields are feeding on the Fed appearing to back off higher for longer,” said Michael Lebowitz, a portfolio manager at RIA Advisors.

“The Fed has made it clear that higher long-term rates and lower stock prices are doing their job for them. If the Fed backs off their narrative the tone will change.”

Powell will speak at an International Monetary Fund panel on global monetary policy challenges, due to start at 2 p.m. Eastern time.

Ahead of the bell, traders digested the latest report on the number of Americans filing for jobless benefits. It showed that initial jobless claims fell by 3,000 to 217,000 last week, suggesting that layoffs aren’t on the rise, even as the pace of job creation slowed in October, according to data released last week.

In other Fedspeak, Richmond Fed President Thomas Barkin said it remains to be seen if more monetary policy tightening is needed, during an MNI webcast on the economic and policy outlook.

Moreover, Barkin also played down the role of moves in long-term bond yields when it comes to informing the Fed’s monetary policy decisions.

“I don’t think long rates are quite useful as a policy variable,” Barkin said. “They can move, you know, pretty significantly over a relatively short time period.”

Companies in focus

• Walt Disney Co.’s
  DIS,
  +7.40%
  stock jumped after the media company reported a spike in streaming customers and better-than-expected earnings.

• AstraZeneca PLC
  AZN,
  +1.57%
  shares rose after the Anglo-Swedish drugmaker upped its earnings forecast for 2023 following a surge in sales of cancer medicines.

• Lyft Inc.
  LYFT,
  -2.75%
  on Wednesday reported third-quarter results that beat Wall Street’s estimates and forecast fourth-quarter sales growth that was better than expected. But shares of the ride-hailing platform fell.

• AMC Entertainment Holdings Inc.’s
  AMC,
  -14.22%
  shares were lower after it reported strong third-quarter results. The movie theater chain and meme stock darling swung to profit and reported positive net income for the second straight quarter after market close Wednesday.

—Jamie Chisholm contributed reporting