Major market averages traded mixed on Thursday as yields rose, a day after the Federal Reserve’s April Beige Book report showed a slight expansion in economic activity.
In the beginning and the S&P 500 (SP500) was -0.2%the Nasdaq Composite (COMP:IND) was nearly flat and the Dow (DJI) era +0.3%.
“The Fed’s anecdote-filled Beige Book strongly suggests that profit-driven inflation is retreating as consumers rebel. However, positive inflation anecdotes do not automatically translate into lower overall inflation: they administered and invented prices that support inflation, not market determined prices,” said Paul Donovan of UBS.
The Beige Book showed that overall economic activity in the United States grew slightly from February 26 to April 8, at about the same pace seen in the previous seven weeks, and the economic outlook among business contacts was “cautiously optimistic.”
The 10-year Treasury yield (US10Y) gained 3 basis points to 4.62%. The 2-year yield (US2Y) rose 4 basis points to 4.97%.
See how Treasury yields have fared along the curve on the Seeking Alpha bonds page.
“Markets have been doing the ‘Do-si-do’ this week, as early recoveries have given way to sell-offs as rates and concerns over events in the Middle East dominate, while weaker tech sentiment has been a driver important yesterday in the day,” said Jim Reid of Deutsche Bank.
U.S. stocks closed lower on Wednesday, with chip stocks dragging the technology sector lower following a weak earnings report from the Dutch semiconductor equipment ASML (ASML).
On the economic front, initial jobless claims and the Philadelphia Fed’s economic outlook for April fell on Thursday.
Initial jobless claims came in at 212,000 compared to economists’ forecasts of 215,000. The Philadelphia Fed’s April Business Outlook came in at 15.5 versus the expected level of 1.5.
Investors are also expecting the March Existing Home Sales report, which is due during market hours, and which is expected to show a decline to a rate of 4.20 million.
Existing home sales cannot deviate from mortgage demand for long, so a correction seems likely, Pantheon Macro added.
On the earnings side of things, Taiwan Semiconductor beat first-quarter estimates and the company’s second-quarter revenue forecast beat expectations.
Later in the day, Netflix (NFLX) will report after the bell.