Wall Street ends down as Treasury yields surge, Powell speaks

NEW YORK, Oct 19 – US stocks ended lower on Thursday, with shares of Tesla down sharply and Treasury yields surging after Federal Reserve Chair Jerome Powell spoke about monetary policy and investors worried whether rates would stay higher for longer.

Tesla (TSLA) shares dropped a day after the carmaker missed Wall Street expectations on third-quarter gross margin, profit, and revenue, and its CEO Elon Musk said he was concerned about high interest rates affecting demand.

Treasury yields rose further and the benchmark 10-year note yield was at a 16-year high of almost 5%.

“The 10-year looks like it’s establishing a new higher trend, which … is putting pressure on equities, at least in the short term,” said Oliver Pursche, senior vice president, advisor for Wealthspire Advisors in Westport, Connecticut.

“Markets were hoping that Jay Powell would indicate that the Fed is going to pause in its interest rate hikes, and he effectively hinted at the idea that they’re going to have to raise again if they continue to have elevated concerns over inflation.”

Powell said at the Economic Club in New York that US central bankers were moving carefully on policy after aggressive rate hikes last year, but he added that the economy’s strength and continued tight labor markets could warrant further rate hikes.

According to preliminary data, the S&P 500 lost 37.02 points, or 0.86%, to end at 4,277.58 points, while the Nasdaq Composite lost 128.61 points, or 0.97%, to 13,185.69. The Dow Jones Industrial Average fell 254.24 points, or 0.76%, to 33,410.84.

Data this week has pointed to strong consumer demand and a tight labor market. A US Labor Department report on Thursday showed the number of Americans filing new claims for unemployment benefits fell to a nine-month low last week.

Also in earnings, Netflix (NFLX) shares jumped after the world’s No. 1 streaming company by subscriber count said it was raising prices for some of its plans in the United States, Britain, and France after adding 9 million users in the third quarter.

(Reporting by Caroline Valetkevitch; additional reporting by Shubham Batra and Shashwat Chauhan in Bengaluru; Editing by Dhanya Ann Thoppil, Saumyadeb Chakrabarty, Vinay Dwivedi, and David Gregorio)