S&P 500 posts third losing session

The S&P 500 fell for a third straight session on Tuesday, May 19, as a jump in long-term Treasury yields weighed on equities and renewed pressure on technology shares. CNBC reported the benchmark index closed down 0.67% at 7,353.61, while the Nasdaq Composite lost 0.84% and the Dow Jones Industrial Average fell 322 points. The 30-year U.S. Treasury yield briefly topped 5.19%, its highest level in nearly 19 years, according to CNBC. Reuters reported the Nasdaq led declines as the benchmark 10-year Treasury yield climbed to its highest level in more than a year. ### Why did Treasury yields drive the selloff? The 30-year Treasury yield briefly rose above 5.19% on Tuesday, a level CNBC said had not been seen since before the financial crisis. Benzinga reported the 30-year yield climbed near 5.2%, while the 10-year yield rose to about 4.67%. Higher Treasury yields tend to raise borrowing costs and can make future corporate earnings look less valuable when discounted back to the present, a relationship that often hits growth stocks hardest. (cnbc.com) CNN reported on May 20 that the 30-year U.S. Treasury yield hit 5.2%, its highest level since 2007, as bond investors reacted to inflation and global economic concerns. CNBC separately said strategists were describing the Treasury market as being in a “danger zone” as long-term yields climbed. ### Which parts of the market took the biggest hit? (cnbc.com) The Nasdaq 100 fell about 1% on Tuesday, according to Benzinga, as chipmakers and other large-cap technology names retreated. Benzinga said losses were concentrated in mega-cap technology and small-cap stocks, with Amazon, Tesla, Alphabet, Meta and Microsoft all lower during the session. Reuters also said the Nasdaq led the declines on Wall Street. (finance.yahoo.com) CNBC reported the S&P 500 and Nasdaq both logged their third straight losing sessions. That pullback came only days after major indexes had been trading near record highs, with other outlets noting the Dow had crossed 50,000 earlier in May before retreating. ### Why do higher yields hit stocks at this stage of the rally? The S&P 500 had recently been near record highs, leaving investors more sensitive to changes in interest-rate expectations. (benzinga.com) Reuters said inflation worries helped push Treasury yields higher, while CNBC said the jump in yields threatened the bull market. When bond yields rise quickly, investors often rotate out of richly valued shares, especially in sectors where prices have been supported by expectations of strong future growth. (cnbc.com) Yahoo Finance, republishing CNN’s report, said the bond market was flashing a warning sign for the global economy as yields rose even when stocks and oil swung on geopolitical headlines. That divergence underscored how closely investors were watching the fixed-income market rather than focusing only on earnings or index milestones. (cnbc.com) ### What are traders watching next? Wednesday, May 20, brings two immediate tests for markets: Nvidia’s earnings after the close and the Federal Reserve’s latest meeting minutes. CNBC said traders were awaiting Nvidia’s report after Tuesday’s losses, and market participants were also monitoring whether Treasury yields eased after their latest surge. The next step for investors is likely to come from those two signals. (finance.yahoo.com) Nvidia’s results will show whether demand for AI-linked spending can keep supporting technology shares, while Treasury trading and Fed minutes will indicate whether the rate pressure that drove Tuesday’s selloff is starting to ease. (cnbc.com)