NASDAQ Stocks Exhibit Volatility Amid Rising Bond Yields and Geopolitical Uncertainty
In a day of erratic trading, the stock markets closed with mostly flat results, with the NASDAQ Composite Index experiencing significant fluctuations. On Tuesday, during the New York trading session, the NASDAQ Composite Index saw a decline of 34 points, marking a continuation of the recent ups and downs in the market.
Over the past five days, the NASDAQ has experienced an average decline of 85 points. Meanwhile, the Dow Jones Industrial Average and the S&P 500 remained relatively flat. The tech sector, in particular, faced pressure due to the rise in bond yields.
Of notable significance was the 2-year Treasury yield, which reached 5.212%, marking its highest level since July 6, 2006, as reported by Dow Jones Market Data. The 10-year Treasury yield also rose to 4.846%, reaching its highest yield since July 25, 2007. The 30-year Treasury yield reached 4.951%, marking its highest yield since August 22, 2007.
The market day began on a positive note, driven by a hotter-than-expected retail sales report and a wave of strong earnings reports. However, the initial rally was followed by a downward trend as investors responded to developments in the ongoing geopolitical landscape. Notably, President Joe Biden is scheduled to visit Israel on Wednesday, raising concerns about the impact of these global events on the financial markets.
An interesting development is the attention investors are paying to US-listed military stocks, which have played a role in boosting the NYSE Composite index, contributing to its 56-point increase during the trading day.
The US stock markets are currently characterised by a higher degree of volatility, with a shift in focus towards US policy regarding the escalating conflict in the Middle East. This geopolitical tension could potentially impact international trade relationships and influence market dynamics.
This shift in focus has taken the spotlight away from issues such as bank contagions, the challenges faced by US tech stocks, and the Federal Reserve’s interest rate hikes, which are ongoing despite the fact that inflation remains under control.
The rapidly changing dynamics in the Middle East, coupled with President Biden’s visit to Israel, have introduced a new level of uncertainty, which may be mirrored in the performance of the US stock markets. Investors are now closely monitoring global events and their potential repercussions on the financial landscape.
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