Stock indexes were mixed in afternoon trading, and the Standard & Poor’s 500 was down slightly from its record high. Losses had been steeper in the morning, when the yield on the 10-year Treasury approached 2.60 percent. But the rise in rates moderated as the day progressed, and stocks recovered most of their losses.
KEEPING SCORE: The S&P 500 was down nearly 2 points, or 0.1 percent, at 2,750, as of 2 p.m. Eastern time. That’s a much milder drop than earlier in the morning, when it was down as much as 0.6 percent. If the index ends the day lower, it would be the first loss in seven days and break its longest winning streak to lead off a year since 2010.
The Dow Jones industrial average rose 9 points, or less than 0.1 percent, to 25,395, the Nasdaq composite fell 11, or 0.2 percent, to 7,152 and the Russell 2000 index of small-cap stocks gained nearly 2, or 0.1 percent, to 1,561.
RATE CONCERNS: Low interest rates have been one of the main propellants for the stock market’s rise since the Great Recession. They make borrowing easier for companies and people, which greases the skids for the economy. Low rates also make bonds less attractive, which pushes investors into stocks.
Investors have long been preparing for a gradual increase in bond yields because the Federal Reserve is slowly raising short-term rates and pulling back from the bond purchases it made to aid the economy. But a sudden or sharp jump higher in rates could easily upset markets, which have been locked in remarkably calm conditions for more than a year.
RATE MOVES: The yield on the 10-year Treasury rose as high as 2.59 percent in the morning before falling back to 2.55 percent, the same level as it was at late Tuesday. It had been as low as 2.40 percent at the start of the year.
A report from Bloomberg News said that China is considering a slowdown or halt to its purchases of Treasurys, which helped push rates higher.
Investors are also speculating about whether Japan’s central bank will slow its bond purchases to keep rates low.
HARDEST HIT STOCKS: Companies that pay big dividends had the day’s biggest losses. They tend to move in the opposite direction of interest rates because higher bond yields can lure away investors seeking income.
Real-estate stocks fell 1.6 percent for the sharpest loss of the 11 sectors in the S&P 500. Utilities lost 1 percent, and telecoms fell 0.8 percent.
FINANCIAL, ENERGY STOCKS RISE: Higher interest rates can benefit banks, allowing them to make bigger profits on loans. Financial stocks in the S&P 500 rose 1.2 percent.
Energy stocks edged up by 0.2 percent after prices for oil rose. Benchmark U.S. crude added 44 cents to $63.41 per barrel. Brent crude, the international standard, gained 24 cents to $69.06.
TAKING OFF: United Continental jumped to the biggest gain in the S&P 500 after the airline said a key revenue trend last quarter was better than it had earlier forecast. It credited stronger demand and fares. United rose $4.60, or 6.7 percent, to $73.08.
TAKING THE SHINE OFF: Signet Jewelers fell to the largest loss of the S&P 500 after it reported weaker sales for the holiday season than a year earlier. Signet dropped $4.51, or 8 percent, to $52.08.
CURRENCIES: The dollar fell to 111.44 Japanese yen from 112.61 yen late Tuesday. The euro rose to $1.1959 from $1.1933, and the British pound fell to $1.3519 from $1.3534.
COMMODITIES: Gold rose $5.20 to $1,318.90 per ounce, silver added 1 cent to $17.02 per ounce and copper gained 2 cents to $3.24 per pound.
MARKETS ABROAD: Japan’s Nikkei 225 index fell 0.3 percent, South Korea’s Kospi lost 0.4 percent and the Hang Seng in Hong Kong added 0.2 percent.
France’s CAC 40 fell 0.3 percent, the FTSE 100 in London added 0.2 percent and Germany’s DAX lost 0.8 percent. (AP)