Major US stock indexes finished Thursday with slight movements after a volatile day, influenced by rising bond yields. The Dow Jones Industrial Average dropped 162 points, or 0.3%, while the S&P 500 and Nasdaq Composite closed nearly flat. This comes as the S&P 500 recently approached its all-time high, but rising bond market pressure has tempered the rally. The Dow is also on track for its fourth consecutive weekly loss, down 0.6% for the period.
The bond market saw continued drama, with the 10-year Treasury yield climbing to 5.225%, its highest since 2007, and the 30-year yield reaching 5.502%. This ascent in yields was attributed to hawkish comments from Federal Reserve Governor Michael Barr, persistently high energy prices due to the Iran war, and a strong purchasing managers' report. Consequently, the 30-year fixed-rate mortgage, which tracks the 10-year note, rose to 7.45%, the highest since 2024, indicating increased borrowing costs for consumers.
The overall economic strength, however, continues to support corporate profits. While headlines have become more ominous, underlying growth drivers like AI-related investment, US corporate profitability, and consumer spending remain robust. This resilience is helping the economy and markets absorb tighter central bank policies and higher rates. Traders are now anticipating additional rate hikes, with a better than 50% chance of two more Fed increases by year-end, according to CME Group data.
Several companies experienced significant stock movements. Akamai Technologies surged almost 20% following an $11.6 billion, seven-year agreement with Anthropic for computing power, which also included a warrant for Anthropic to buy up to 5% of Akamai shares at $111.33 each. Costco Wholesale's shares were marginally higher after reporting fourth-quarter adjusted earnings of $6.60 per share and revenue of $95.72 billion, both surpassing analyst estimates. In contrast, Scholastic Corp. saw its shares tank almost 13% after reporting an adjusted loss of $3.63 per share in the fiscal first quarter and a 4% decline in revenue to $216.8 million.
