Wall Street closed lower on Wednesday, marking the end of a multi-session rally, as Treasury yields spiked as gloomy data and downbeat corporate outlooks tossed cold water on investor risk appetite.
All three major US stock indexes lost ground, while the benchmark Treasury yield went up to touch a new 14 year high.
The market is taking a breather. Market participants balanced a string of mixed company earnings, including Baker Hughes Co, Travelers Companies Inc., and Procter Gamble, against worries about central bank interest rate hikes to contain inflation.
David Keator, partner at Keator Group, said the market is still unsure as to when the Fed will recognize what they've done to date is beginning to take effect. There has been talk of tightening too much as the Fed is taking its mandate seriously of tackling inflation. The Dow Jones Industrial Average fell 99.99 points, or 0.33%, to 30,423. The S&P 500 lost 24.82 points, or 0.67%, to 3,695. 16 and the Nasdaq Composite dropped 91.89 points, or 0.85%, to 10,680. European stocks broke their recent winning streak because of the data showing UK inflation hitting 10.1% in September.
The pan-European STOXX 600 index lost 0.53% and the MSCI's gauge of stocks fell 0.89%.
The broadest index of Asia-Pacific shares outside Japan closed 1.65% lower, while Japan's Nikkei rose 0.37%.
The benchmark Treasury yield was at its highest level since mid- 2008 due to a sell-off in US government bonds due to expectations of continued aggressive interest rate hikes from the Federal ReserveFederal Reserve.
The last time the benchmark 10 year note was at 4.1272% was later on Tuesday, from 3.998%.
The 30 year bond yield was 4.1259%, down from 4.021% on Tuesday.
The dollar rebounded from two-week lows as hotter than expected UK inflation data fueled the recession worries that dragged down the sterling and helped support the dollar against a basket of world currencies.
The dollar index went up 0.7%, with the euro down 0.83% to $0.977.
The dollar was close to a level that some believe could trigger intervention by Japan, as it touched a 32 year peak against the yen.
The Japanese yen weakened by 0.40% against the dollar at 149.88 per dollar, while sterling was last trading at $1.122, down 0.87% on the day.
Crude prices went up on tighter supply conditions, rebounding back after hitting two week lows in the wake of US President Joe Biden's plans to release oil from strategic reserves.
The US crude rose by 3.30% to settle at $85.55 per barrel, while Brent settled at $92.41 per barrel, up 2.64% on the day.
The dollar strength weighed on gold, sending prices for the safe-haven metal to a three-week low.