Volatility Spooks Investors As Treasury Yields, Dollar Climb Ahead Of Key Economic Releases: What's Driving Markets Wednesday?

Volatility surged back into the market on Wednesday, with the CBOE Volatility Index (VIX) spiking 9% after hitting nearly three-year lows last week, fueled by fresh upticks in Treasury bond yields.

The yield on the 30-year Treasury note, a crucial benchmark for mortgage rates nationwide, soared to 4.74%, rising more than 15 basis points over two sessions and nearing its highest close since May 2.

As yields climbed, bond prices dropped, with the iShares 20+ Year Treasury Bond ETF TLT falling 1.3%, following a 1.4% decline on Tuesday.

Investors fear that the Fed will not cut interest rates more than once by the end of the year and not before November, as suggested by current Fed futures pricing.

All major U.S. equity indices and all eleven sectors traded in the red, on a day when the U.S. dollar effectively played its safe haven role. The Invesco DB USD Index Bullish Fund ETF UUP rose 0.5%, marking its strongest day in a month.

Rising yields and a stronger dollar pressured commodities, with gold prices down 1%, oil down 1.3%, and natural gas down 5%.

Bitcoin BTC/USD dropped 1.5%, echoing Tuesday’s decline.

Wednesday’s Performance In Major US Indices, ETFs

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.6% lower to $526.92
• The SPDR Dow Jones Industrial Average DIA fell 0.9% to $385.15
• The tech-heavy Invesco QQQ Trust QQQ was down by 0.4% to $457.81
• The Communication Services Select Sector SPDR Fund XLC minimized losses, down by 0.2%.
• The Energy Select Sector SPDR Fund XLE lagged, easing 1.7%.

Wednesday’s Stock Movers

• American Airlines Group Inc. AAL tumbled 14%, on track for the worst-performing day since March 2020, after the airline company trimmed its Q2 earnings guidance. Additionally, AAL suffered analyst downgrades from Jefferies and Seaport Global.
• ConocoPhillips COP will buy Marathon Oil Corp. MRO in an all-stock deal worth $22.5 billion, implying a 14% premium for Tuesday’s close. Shares of ConocoPhillips fell 4%, while MRO rose 8% only.
• Bank OZK OZK plummeted 14%, eyeing the sharpest decline since Mar. 19, 2020, as Citigroup downgrade the stock from Buy to Sell, citing substantial concerns on two of the bank’s largest loans.
• Dicks Sporting Goods Inc. DKS spiked 15% after the company largely beat Street’s earnings and revenue expectations.
• Other stocks reacting to corporate earnings were Heico Corp. HEI up 2.1%, Viking Holdings Ltd VIK down 2.7%, Chewy Inc. CHWY up 29%, Abercrombie & Fitch Company ANF 22%, Advance Auto Parts Inc. AAP down 8%.
• Companies reporting earnings after the close include Salesforce Inc. CRM, Agilent Technologies Inc. A, HP Inc. HPQ, Pure Storage Inc. PSTG, Nutanix Inc. NTNX, Okta Inc. OKTA, Ui Path Inc. PATH and Capri Holdings Ltd CPRI.

Now Read: How To Trade US Elections: ‘A Trump Victory Is Likely To Lead To A Stronger Dollar’

Image: Pixabay