Stocks careened off the road yesterday, and they’ve been under some more pressure today, too. The problem? Interest rate fears! The yield on the 30-Year Treasury Bond is closing in on 5% for the first time since October 2023. 10s aren’t far behind at 4.72%. The dollar is rising along with yields, while gold and silver are mixed and crude oil is up a bit.
Wall Street loves cheap money. Take it away, and you’re going to have problems. Sure enough, worries about a 5% yield on the benchmark 10-Year Treasury Note are sideswiping stocks. High-growth stocks in the technology arena got hit particularly hard, with Nvidia Corp. (NVDA) a prime example. Investors loved CEO Jensen Huang’s presentation in Las Vegas at first. But as yields rose, they dumped NVDA and its tech cohorts, leaving the stock down 6.2% on the day.
10-Year Treasury Yield (3-Year Chart)
Source: Yahoo Finance
What caused rates to spike? One culprit was the JOLTS report on job market conditions. It showed job openings rebounding to 8.098 million in November, easily topping economists’ expectations. Another was the ISM Services Index, which came in at 54.1 versus a forecast of 53.3. Worse, an inflation sub-index jumped to 64.4 in December from 58.2 a month prior.
Interest rate futures markets have aggressively dialed back expectations for Federal Reserve rate cuts. Traders are now placing the highest probability on just ONE cut sometime in mid-2025. A few months ago, they were expecting three or four this year.
One last note: Several of the stocks you’ll find in our just-released MoneyShow Top Picks 2025 Report aren’t as rate-sensitive as “Big Tech.” Some are in sectors that tend to do BETTER when rates rise. Find out more by clicking HERE to download your free copy.
