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Markets Face Pressure as Bond Yields Rise

Stocks in the S&P 500 Index are experiencing a decline today, with a decrease of 0.25%. Similarly, the Dow Jones Industrials Index has dropped 0.26%, and the Nasdaq 100 Index is down 0.13%. June E-mini S&P Futures have also decreased by 0.26%, while June E-mini Nasdaq Futures are on a downtrend.

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In the current market scenario, the S&P 500 Index ($SPX) has experienced a decline of 0.25%, with...
In the current market scenario, the S&P 500 Index ($SPX) has experienced a decline of 0.25%, with its corresponding ETF, SPY, following suit. Similarly, the Dow Jones Industrials Index ($DOWI) is down 0.26%, and the Nasdaq 100 Index ($IUXX) is slightly less affected, seeing a dip of 0.13%. Meanwhile, June E-mini S&P futures (ESM25) are down 0.26%, and June E-mini Nasdaq futures continue to mirror this downward trend.

Markets Face Pressure as Bond Yields Rise

On May 29, 2025, the S&P 500 Index, Dow Jones Industrials Index, and Nasdaq 100 Index experienced a modest decline, dropping 0.25%, 0.26%, and 0.13%, respectively. Moreover, June E-mini S&P futures and June E-mini Nasdaq futures followed suit, losing 0.26% and 0.10%, respectively.

The stock market, which had started the day on a positive footing, turned bearish as an increase in bond yields cast a shadow over equities. Specifically, the 10-year T-note yield rose to 4.49%. Earlier in the day, all three major indexes had posted new weekly highs.

Stock indexes benefited from President Trump's weekend action, which delayed the imposition of a 50% tariff on US imports from the EU until July 9. The market eagerly awaited Nvidia's earnings results, scheduled after market close, to gauge the impact of the trade war and the outlook for artificial intelligence.

US MBA mortgage applications experienced a slight dip in the week ending May 23, with the purchase mortgage sub-index inching up 2.7% and the refinancing sub-index dropping 7.1%. Meanwhile, the average 30-year fixed rate mortgage rose to 6.98% from 6.92% the previous week.

The US May Richmond Fed manufacturing survey came in at -9, in line with expectations. The markets currently project a minimal chance – 2% – of a -25 basis point rate cut at the next FOMC meeting on June 17-18.

This week, the market focus lies on any tariff news, new trade deals, the minutes of the May 6-7 FOMC meeting, which will be released later today, Nvidia's quarterly earnings, initial unemployment claims, Q1 GDP, Apr pending home sales, Apr personal spending, Apr personal income, and the Apr core PCE price index – the Fed's preferred inflation gauge. Lastly, the University of Michigan May consumer sentiment index is expected to be revised upward by 0.2 points to 51.0.

With more than 90% of companies in the S&P 500 having reported their quarterly results, earnings growth in Q1 is running at +13.1%, compared to the forecast of +6.6% before the start of the season. Full-year 2025 corporate profits for the S&P 500 are projected to increase +9.4%, a decrease from the initial forecast of +12.5% in early January.

Overseas stock markets were mostly in the red, with the Euro Stoxx 50 dropping 0.50%, China's Shanghai Composite closing down 0.02%, and Japan's Nikkei Stock 225 closing flat after reaching a 2-week high.

June 10-year T-notes were down 11 ticks and the 10-year T-note yield rose to 4.497%. The rise in yield can influence investor preferences, potentially pushing them towards safer bonds over stocks.

European government bond yields also went up today. The 10-year German bund yield increased 1.3 basis points to 2.545%, while the 10-year UK gilt yield surged 4.2 basis points to 4.707%.

Several notable stock movers on May 29 include Okta, down more than 12% due to lower-than-expected Q2 current remaining performance obligation forecasts; Galaxy Digital, down more than 12% due to an announced offering of shares; PDD Holdings, which lost more than 3% to lead Nasdaq 100 losers following a double-downgrading by UOB; and Booze Allen Hamilton Holding, down more than 1% after Goldman Sachs downgraded the stock.

Elevance Health stood out as a top gainer, rising more than 1% after reaffirming its full-year adjusted profit forecast. Furthermore, Homebuilding stocks and suppliers experienced pressure due to higher T-bond yields, leading DR Horton, Lennar, PulteGroup, Mohawk Industries, Toll Brothers, and Builders FirstSource to drop more than 2%.

Agilent Technologies Inc, Capri Holdings Ltd, Dick's Sporting Goods Inc, elf Beauty Inc, HP Inc, Macy's Inc, nCino Inc, Nordson Corp, Nutanix Inc, NVIDIA Corp, Pure Storage Inc, Salesforce Inc, SentinelOne Inc, Synopsys Inc, U-Haul Holding Co, and Veeva Systems Inc are among the companies releasing their earnings reports today.

Investors may be influenced to favor safer bonds over stocks due to the rise in 10-year T-note yield to 4.497%. This follows a bearish turn in the stock market, with all major indexes experiencing a decline following an increase in bond yields, including the S&P 500, Dow Jones Industrials Index, and Nasdaq 100 Index. Many companies are set to release their earnings reports today, with Nvidia's results specifically being watched closely to gauge the impact of the trade war and the outlook for artificial intelligence.

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