Marketbites: Treasury Yields Rising
Portfolio Manager Commentary:
U.S. stocks fell Monday, led downward by the tech-heavy Nasdaq Composite, as investors grew increasingly cautious of rising bond yields. Treasury bond yields rose, with benchmark 10-year yield up by nearly 11 basis points at 3.64% and the 2-year yield adding around 18 basis points to 4.48%.
Investors were taking some profits after the stock market’s hot start to the year. The S&P 500 is up more than 7% for 2023, while the Nasdaq Composite has advanced for the last five weeks, a streak not seen since November 2021.
Monday marked the start of another week packed with earnings. Tyson Foods fell 4.6% on the back of a weaker-than-expected earnings report. The Children’s Place, a kids’ apparel retailer, lost 4% after it pulled back its outlook for its fourth quarter. Disney, Chipotle, DuPont, and PepsiCo are among the major companies reporting earnings later this week, which investors will be watching for any indications that prior interest rate hikes have hurt companies’ finances.
Chart of the Day:
Oil companies delivered the market’s best shareholder returns last year, but Wall Street is still cautious. The biggest Western oil companies, Exxon Mobil Corp., Chevron Corp. and Shell PLC, together cleared a record of more than $132 billion in annual profit in 2022 and handed investors $78 billion via share buybacks and dividends, about 50% more than the last time oil topped $100 a barrel in 2014. Yet many investors are still keeping their distance. Some shareholders deserted U.S. shale after incurring losses in the industry’s debt-fueled oil boom in the 2010s, and fear a repeat. Others such as pension funds, endowments, and faith-based organizations have sold some or all of their oil-and-gas holdings, citing concern about the industry’s greenhouse-gas emissions.