Bond Yields Rise and Stocks Fall Amid Strong Economic Data
Stocks fell sharply as bond yields surged following strong economic data that raised expectations for continued Federal Reserve rate hikes. The 10-year Treasury yield climbed to a new 19-year high above 5.12%, driven by an unexpectedly robust S&P Global US Flash PMI report showing improved manufacturing conditions and rising input costs. The market interpreted the positive economic indicators as negative news, suggesting that the Fed may maintain higher rates for longer to combat inflation. The probability of a rate hike at each of the Fed's final two meetings in 2026 increased from 38% to 57%. Most major indices declined, with only energy and industrials sectors posting gains due to rising oil prices. Boeing bucked the trend as its shares rose over 1.5%, supported by a union recommendation for members to accept Boeing's latest contract offer and anticipation of potential discussions during Trump’s meeting with Chinese President Xi Jinping.
Tickers: $BA $COMP $COST $DRI $SPX
Topics: Federal Reserve policy S&P Global PMI report stock market decline Treasury yields