Stock market trades near session lows as rise in U.S. government bond yields spooks Wall Street

The Dow Jones Industrial Average on Thursday was trading near the lows of the session as a steady rise in the rates of long-dated Treasurys weighed on buying appetite for stocks. The 10-year Treasury note yield was hitting its highest level since Feb. 23, around 2.93%, according to Tradeweb data and flirting with highest yield level of 2018. Meanwhile, the Dow was off about 150 points, or 0.5%, at 24,625, while the S&P 500 index declined by 0.8% at 2,687, with financials, which benefit from rising rates, producing the only gains among the broad-market benchmark's 11 sectors. The Financial Select Sector SPDR ETF , a popular financial exchange-traded fund, was up 1.5% and on track for its best daily gain since last week. However, the jump in yields was causing a broader reassessment of of equity values against other asset considered less risky, market participants said. "More broadly, higher real interest rates mean that the income stream from equity markets needs to be valued at a lower multiple," Guy LeBas, head of fixed-income strategy for Janney Montgomery Scott, told MarketWatch. In other, higher yields can mean higher costs for U.S. corporations. Presently, the dividend yield for the average S&P 500 component was around 2%, while the dividend yield for Dow components is at 2.3%, according to FactSet data. Climbing yields for risk-free Treasurys can undercut demand for stocks. LeBas said higher inflation expectations, notably fueled by a rise in crude-oil futures , also was nudging yields on long-dated government debt higher. Rising inflation, or prices, can chip away at bonds fixed payments, spurring selling in the asset and pushing yields, which move inversely to prices, higher.

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