Volatility Spooks Investors As Treasury Yields, Dollar Climb Ahead Of Key Economic Releases: What's Driving Markets Wednesday?
Volatility surged back into the market on Wednesday, with the CBOE Volatility Index (VIX) spiking 9% after hitting nearly three-year lows last week, fueled by fresh upticks in Treasury bond yields.
The yield on the 30-year Treasury note, a crucial benchmark for mortgage rates nationwide, soared to 4.74%, rising more than 15 basis points over two sessions and nearing its highest close since May 2.
As yields climbed, bond prices dropped, with the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) falling 1.3%, following a 1.4% decline on Tuesday.
Investors fear that the Fed will not cut interest rates more than once by the end of the year and not before November, as suggested by current Fed futures pricing.
All major U.S. equity indices and all eleven sectors traded in the red, on a day when the U.S. dollar effectively played its safe haven role. The Invesco DB USD Index Bullish Fund ETF (NYSE:UUP) rose 0.5%, marking its strongest day in a month.
Rising yields and a stronger dollar pressured commodities, with gold prices down 1%, oil down 1.3%, and natural gas down 5%.
Bitcoin (CRYPTO: BTC) dropped 1.5%, echoing Tuesday’s decline.
Wednesday’s Performance In Major US Indices, ETFs
| Major Indices | Price | 1-day %Chg |
| Nasdaq 100 | 18,812.28 | -0.3% |
| S&P 500 | 5,281.15 | -0.5% |
| Dow Jones | 38,512.75 | -0.9% |
| Russell 2000 | 2,040.63 | -1.2% |
According to Benzinga Pro data:
- The SPDR S&P 500 ETF Trust (NYSE:SPY) was 0.6% lower to $526.92
- The SPDR Dow Jones Industrial Average (NYSE:DIA) fell 0.9% to $385.15
- The tech-heavy Invesco QQQ Trust (NASDAQ:QQQ) was down by 0.4% to $457.81
- The Communication Services Select Sector SPDR Fund (NYSE:XLC) minimized losses, down by 0.2%.
- The Energy Select Sector SPDR Fund (NYSE:XLE) lagged, easing 1.7%.
Wednesday’s Stock Movers
- American Airlines Group Inc. (NYSE:AAL) tumbled 14%, on track for the worst-performing day since March 2020, after the airline company trimmed its Q2 earnings guidance. Additionally, AAL suffered analyst downgrades from Jefferies and Seaport Global.
- ConocoPhillips (NYSE:COP) will buy Marathon Oil Corp. (NYSE:MRO) in an all-stock deal worth $22.5 billion, implying a 14% premium for Tuesday’s close. Shares of ConocoPhillips fell 4%, while MRO rose 8% only.
- Bank OZK (NASDAQ:OZK) plummeted 14%, eyeing the sharpest decline since Mar. 19, 2020, as Citigroup downgrade the stock from Buy to Sell, citing substantial concerns on two of the bank’s largest loans.
- Dicks Sporting Goods Inc. (NYSE:DKS) spiked 15% after the company largely beat Street’s earnings and revenue expectations.
- Other stocks reacting to corporate earnings were Heico Corp. (NYSE:HEI) up 2.1%, Viking Holdings Ltd (NYSE:VIK) down 2.7%, Chewy Inc. (NYSE:CHWY) up 29%, Abercrombie & Fitch Company (NYSE:ANF) 22%, Advance Auto Parts Inc. (NYSE:AAP) down 8%.
- Companies reporting earnings after the close include Salesforce Inc. (NYSE:CRM), Agilent Technologies Inc. (NYSE:A), HP Inc. (NYSE:HPQ), Pure Storage Inc. (NYSE:PSTG), Nutanix Inc. (NASDAQ:NTNX), Okta Inc. (NASDAQ:OKTA), Ui Path Inc. (NYSE:PATH) and Capri Holdings Ltd (NYSE:CPRI).
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