Stock Market Insights: Dow Jones Declines as Treasury Yields Climb

Market Overview Amid Rising Treasury Yields

The Nasdaq Composite snapped its five-day winning streak as the broader market extended its slide in the face of rising bond yields. The tech-heavy index dropped 1.6%, while the Dow Jones Industrial Average fell 410 points, or 1%. The S&P 500 was down 0.9%.

Volatility and Defensive Stocks

The market's fear gauge, the VIX, briefly spiked above 20, which signaled heightened volatility. Real estate investment trusts and utilities were the day's standouts, as Wall Street favored defensive stocks.

Key Economic Indicators

The yield on the 2-year Treasury note was up to 4.085%, while the 10-year yield was up to 4.24%. It’s the highest 3 p.m. yield for the 10-year since July 25. Bond prices, which move inversely with yields, fell in recent weeks as economic data rolled out hotter than expected.

Upcoming Considerations

Next week’s October jobs report will be a major test because it could factor into the Federal Reserve’s November interest-rate decision. According to BTIG Chief Market Technician Jonathan Krinsky, stocks have largely ignored bond market and dollar fluctuations recently.

Market Outlook

Krinsky suggests that whether this pullback indicates pre-election jitters, stocks broadly face downside risks over the coming weeks. He sees a decent probability of a pullback to between 5500 and 5650.