Economist's Insights

Today’s Trading Activity – Stocks Reach New Records as Yields Rise the Most Since January

Jul 25, 2017

Tech was a laggard Tuesday and the Nasdaq trailed the Dow and S&P. The Dow led with a gain of 0.5% but was the only index not to reach a new record close. After setting a new intraday record high, the blue-chip index fell back as updated outlooks from 3M and United Technologies overshadowed better-than-expected quarterly earnings. The S&P’s 0.3% gain and the Nasdaq’s negligible 0.02% improvement were enough to register new record high closes. Crude prices rallied almost 5% in their biggest daily gain since November and are up 6% so far this week. Treasury yields began climbing after pre-market earnings from several major U.S. companies topped estimates with the upward momentum strengthening gradually throughout the day. In the Treasury market, the 2-year yield rose 3.3 bps (1.39%) as the 5-year yield increased 6.9 bps (1.89%) and the 10-year yield added 8.0 bps (2.34%). Tuesday’s moves marked the biggest daily increases in the 5-year and 10-year yields since late January. Between the 2-year and 10-year notes, the curve experienced its second sharpest single-day steepening (4.7 bps) of the year. While it only had a modest market impact, worth noting was the Senate successfully voting to begin debate on repeal and/or replace.