S&P 500 plunges 1%, Dow falls more than 100 points as Treasury yields hit new highs

Shares fell in choppy trade Thursday as investors weighed several key earnings reports and kept an eye on the bond market, where Treasury yields continue to climb.

The Dow Jones Industrial Average fell 116 points, or 0.4%. The Nasdaq Composite lost 0.8%, while the S&P 500 fell 0.9%. The Dow rose more than 300 points to session highs, but stocks faded as Treasury yields rose.

The benchmark 10-year Treasury yield hit a high of 4.222% on Thursday, trading at levels not seen since 2008. Rising rates have been a headwind for stocks all year, as the Federal Reserve continues to try to calm inflationary pressures not seen in decades.

“As long as the official policy is to drive the stock market down, to make people less wealthy, to make them buy less stuff, to make prices stop going up, while doing nothing for fiscal policy, we think the right position is to be bearish on equities and bullish on inflation,” David Einhorn of Greenlight Capital said in a letter to investors obtained by CNBC.

Several strong earnings reports supported the market, with AT&T and IBM rising 7% and 4%, respectively, after beating estimates on higher and lower results for their latest quarter.

In contrast, shares of Tesla fell 5% after the electric vehicle maker said late Wednesday that it expected to miss its 2022 shipments target. The company also released quarterly revenue that topped analysts’ expectations.

Rising Treasury yields are one reason many strategists doubt the market can sustain a near-term recovery, even though the third-quarter earnings season has been better than expected so far.

“We think earnings will be good enough to keep the market in a trading range, but not good enough to send it back to its mid-summer high and given the lagged nature of monetary policy, we would say time is not in the market. We note that U.S. rates continue to make new cycle highs, helping the dollar beat its peers,” Michael Shaul of Marketfield Asset Management said in a note. The dollar on Thursday hit its highest level against the Japanese yen since 1990.

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