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Bond Sell-Off Drags Stocks Lower Amid Disturbing Inflation News

Strategic Insights

— 2 min read

Disturbing inflation news and concerns over interest rates drove a bond sell-off on Tuesday, sending stocks lower in active trading. The Dow Jones industrial average skidded 22.79 points to 3809.23, its fifth straight decline and lowest level since January 6. The bond market reacted sharply to the release of a stronger-than-expected report on fourth-quarter gross domestic product and a declining National Association of Purchasing Management (NAPM) index, sparking rumors that the Federal Reserve might raise interest rates. Analysts cited the NAPM report's employment and prices indexes as disturbing inflation news, which sent the bond market into a tailspin and spilled over into the stock market.

Key Takeaways:

  • The Dow Jones industrial average declined 22.79 points to 3809.23, its fifth straight decline and lowest level since January 6.
  • The bond market reacted sharply to the release of a stronger-than-expected report on fourth-quarter gross domestic product and a declining NAPM index.
  • The NAPM report's employment index edged up to 50% in February from 48.3% in January, while its prices index jumped to 67% from 59.8% in January.
  • Analysts cited the NAPM report's disturbing inflation news as the reason for the bond market's sharp decline.
  • The Treasury securities ended sharply lower, with the 30-year Treasury bond tumbling 1 point to 93 8/32.
  • The U.S. dollar finished slightly higher against the mark and unchanged against the yen.
  • The Nasdaq Stock Market and the American Stock Exchange also ended lower, with the Nasdaq composite index falling 3.86 to 788.64.

Statistics:

  • Dow Jones industrial average: 3809.23 (-22.79 points or -0.59%)
  • Treasury securities:

- 30-year Treasury bond: 93 8/32 (-1 point)

- Yield: 6.77% (up from 6.66% on Monday)

  • U.S. dollar:

- vs. German mark: 1.7095 (up from 1.7040 on Monday)

- vs. Japanese yen: 104.60 (unchanged from Monday)

  • NYSE composite index: 257.81 (-1.42 points or -0.55%)
  • S&P 500 index: 464.44 (-2.70 points or -0.58%)
  • NASDAQ composite index: 788.64 (-3.86 points or -0.49%)
  • Bond market trading volume: 304,450,000 shares (up from 267,610,000 on Monday)
  • NYSE trading volume: 371,925,280 shares (up from 325,305,680 on Monday)

Sources:

  • "New York Times" (exact date not provided)
  • "Wall Street Journal" (exact date not provided)
  • National Association of Purchasing Management (NAPM) report (exact date not provided)
  • Commerce Department report (exact date not provided)
  • "Frank Sakdalan UPI Business Writer" (no date provided)

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