Wall Street’s main indexes ended sharply lower on Thursday, with the Nasdaq index posting its largest daily percentage fall in four months, as technology-related stocks remained under pressure following a rise in U.S. bond yields.
The benchmark 10-year Treasury yields hit a one-year high of 1.614%, prompting investors concerned about rich valuations to lock in profits on some high-flying growth stocks.
The Treasury note yield rose above S&P 500 dividend yield, wiping out the stock market yield’s strong advantage.
“Rates matter. At 1.5%, the yield is comparable to S&P 500 dividend yield,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “And there’s no capital risk with a 10-year, you’ll get your principal back. All of a sudden it’s competitive with stocks,”