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Investing.com — U.S. stock markets opened lower on Wednesday as nervousness about a possible withdrawal of monetary stimulus sent bond yields higher, weighing on the valuations of technology stocks in particular.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average had eked out a gain of 76 points, or 0.2%, to 32,902 points, but the S&P 500 was down 0.3% and the Nasdaq Composite was down 0.9%.
Earlier, fresh data showed that both housing starts and building permits fell by more than expected in February, in what some interpreted as the first signs that the rise in bond yields in recent weeks is feeding through to the rate-sensitive housing market. The number of mortgage applications last week also fell for the fifth week in six, indicating that higher refinancing rates are starting to have an impact.
The yield on the 10-year Treasury bond rose to a fresh 13-month high of 1.68% earlier, amid fears that a strong U.S. recovery this year will move up the date when the Fed starts to withdraw stimulus. At present, it’s committing to buy $120 billion in bonds each month through the end of 2021, while its latest guidance indicates that policy-makers don’t see any interest rate hike as necessary before 2024.
Analysts expect the Fed’s guidance after Wednesday’s meeting to show at least one or two members bringing forward their expectations for higher rates into 2023, which would bring the central bank more into line with the market’s own implicit forecasts.
