Stocks are well in the red across the board today as rising Treasury yields alarm traders. Why are stocks down today?
Well, it seems traders are pricing in a lower chance of a rate cut come at the March Federal Reserve meeting. Indeed, according to CME Group’s FedWatch tool, there’s just a 58% chance of a rate cut in March, a notable decline from in recent weeks and months.
Reasonably so, on Tuesday, Fed Governor Christopher Waller — one of the early champions of a Fed pivot — warned investors that the rate-cut schedule may be slower than some had predicted. This has pushed up the 10-year Treasury yield and is likely the chief cause of today’s dip.
“By the end of this year, rates will likely be lower than they are now — but it’s not going to be a straight line,” Thomas Martin, Senior Portfolio Manager at Globalt Investments told CNBC. “In the meantime, people who are positioned aggressively for more rate declines and for higher stocks, are maybe pulling in their horns and getting a little bit more diversified.”
Why Are Stocks Down Today?
The Dow Jones Industrial Average closed down by about 0.2% by the end of Wednesday’s trading session. Meanwhile, the Nasdaq Composite and S&P 500 lost about 0.59% and 0.56%, respectively.
With today’s loss, stocks are officially in the red for the year, at least for the S&P and Dow Jones. Indeed, year-to-date (YTD), the S&P is down roughly 0.08% while the Dow is eyeing an early 1.19% loss. The Nasdaq is still holding onto its gains, however, with the index up 0.61% since Jan. 1.
One of the biggest losers today is Spirit Airlines (NYSE:SAVE) stock, which closed down by more than 22% after news of a failed merger with fellow discount airline JetBlue (NASDAQ:JBLU)
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
