US Markets Close Lower On Yield, Covid Jitters

US stocks ended sharply lower on Thursday, hit by rising Treasury yields and fresh worries about the coronavirus pandemic in Europe.

Losses in US stocks accelerated after France's prime minister imposed a month-long lockdown on Paris and several other regions due to the health crisis.

"That last hit was from news of the Paris lockdown. It wasn't received that well," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "Here in the United States, we anticipate this big reopening and the virus is looking good, but we are not looking outside of the US, and it's not all good."

The yield on the benchmark 10-year Treasuries crossed 1.75 percent to hit a 14-month high a day after the Fed projected the strongest growth in nearly 40 years as the Covid-19 crisis winds down. The Fed also repeated its pledge to keep its target interest rate near zero for years to come. .

"The Fed just saying they are not going to raise rates until 2023 really means nothing," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "The Fed is on the sidelines, but if bond yields keep going up, that is what really hurts the economy."

Apple and Amazon both dropped. Tech and other growth stocks are particularly sensitive to rising yields because their value rests heavily on earnings far into the future, which are discounted more deeply when bond yields rise.

A recent US$1.9 trillion spending stimulus sparked fears of rising inflation and contributed to the jump in longer-end Treasury yields.

Underscoring the staggered recovery in the labor market, data showed the number of Americans filing for jobless benefits unexpectedly rose last week.

A separate report indicated the Philly Fed business index jumped more than expected, to its highest level since 1973.

The Dow Jones Industrial Average fell 0.5 percent to 32,862, the S&P 500 lost 1.5 percent to 3,915 and the Nasdaq Composite dropped 3 percent to 13,116.

The S&P 500 and the Dow both closed at record highs on Wednesday. (Reuters)