GLOBAL MARKETS-US stocks end mixed on rising Treasury yields, Middle East jitters

BY Reuters | TREASURY | 04/16/24 04:20 PM EDT

(Updates to 16:04 ET)

By Stephen Culp

NEW YORK, April 16 (Reuters) - Wall Street see-sawed to a mixed close on Tuesday as rising U.S. Treasury yields and elevated geopolitical worries counteracted a generally positive string of first-quarter corporate results.

While the S&P 500 and the Nasdaq ended the session modestly lower, the blue-chip Dow was boosted into positive territory by UnitedHealth Group (UNH) shares in the wake of its earnings report.

But stocks were held in check by benchmark Treasury yields climbing to fresh five-month highs due to dimming expectations of an interest rate cut from the U.S. Federal Reserve.

Fed Chair Jerome Powell said on Tuesday it will likely take the central bank longer than expected to become confident that inflation is falling, due to a run of disappointing data.

Tensions arising from the growing conflict in the Middle East were brought back to the boil after Israel vowed to respond to Iran's weekend attack despite international calls for restraint.

"We're into earns season, where on any particular day, depending on who's reporting, you'll get some ripples," said Chuck Carlson chief executive officer at Horizon Investment Services in Hammond, Indiana. "Second, there's the continuing overhang of Middle East concerns weighing on decisions whether to buy or not, and third, you've got investors trying to evaluate the apparent reacceleration of inflation."

With first-quarter earnings season underway, upbeat results from UnitedHealth (UNH) as well as Morgan Stanley (MS) offset Bank of America's (BAC) and Johnson & Johnson's (JNJ) respective profit drop and revenue miss.

"I expect the market to begin to buy again, but in the near term geopolitical concerns are outweighing the strength of the U.S. economy," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "You need strong earnings to keep this rally moving."

The Dow Jones Industrial Average rose 63.66 points, or 0.17%, to 37,798.77; the S&P 500 lost 10.44 points, or 0.21%, to 5,051.38; and the Nasdaq Composite dropped 19.77 points, or 0.12%, to 15,865.25.

European shares notched their biggest single-day percentage drop in over nine months as rising anxieties over the Middle East conflict dampened investor risk appetite.

The pan-European STOXX 600 index lost 1.53% and MSCI's gauge of stocks across the globe shed 0.77%.

Emerging market stocks lost 2.01%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 2.08% lower, while Japan's Nikkei lost 1.94%.

Yields for 10-year U.S. Treasuries hit a new five-month high on diminishing expectations of Fed policy easing this year, and after stronger-than-expected economic data from China revived worries that inflation could reaccelerate.

Benchmark 10-year notes last fell 8/32 in price to yield 4.6612%, from 4.628% late on Monday.

The 30-year bond last fell 11/32 in price to yield 4.7626%, from 4.74% late on Monday.

The dollar touched a five-month high against a basket of world currencies but was last essentially unchanged, as the yen continued to hover near 34-year lows, keeping intervention watchers on alert.

The dollar index rose 0.12%, with the euro down 0.02% to $1.062.

The Japanese yen weakened 0.23% versus the greenback to 154.66 per dollar, while sterling was last trading at $1.2431, down 0.10% on the day.

Crude prices settled nearly flat as economic headwinds countered supply concerns arising from geopolitical turmoil.

U.S. crude edged down 0.06% to settle at $85.36 per barrel, while and Brent settled at $90.02 per barrel, down 0.09% on the day.

Gold prices inched higher as the safe-haven metal's gains were capped by rising Treasury yields.

Spot gold added 0.3% to $2,389.69 an ounce.

(Reporting by Stephen Culp; Additional reporting by Amanda Cooper in London; Editing by Marguerita Choy, Chizu Nomiyama and Jonathan Oatis)

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Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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