Stock markets will continue to exercise caution as U.S. Treasury bond yields melted higher. Although the Nasdaq (QQQ), Dow Jones, and S&P 500 (SPY) opened higher on hopes of a truce with Iran, that optimism faded. Rumors are fleeting.
The 30-Year Treasury bond yield rose to 5.51%. This is 51 bps higher than the 5.0% that markets are prepared for. The 10-Year Treasury yield traded at 5.21%. That pushed mortgage rates above the 7% range. Housing stocks like D.R. Horton (DHI), Zillow (Z), and Lennar (LEN) might attract more short-sellers hedging their bullish stock market exposure.
The biggest stocks moving today are Datadog (DDOG), a software firm, trading up by 7%. Akamai Technologies (AKAM) struck a deal to provide computing supply for AI chatbot firm Anthropic worth $12 billion.
Zscaler (ZS) fell by 8.6% on fresh worries that AI firms will develop cybersecurity agent solutions.
Meta Platforms (META) pulled back by 3.4%. The stock broke out from a $540 low in mid-August to as high as around $780. Speculators bet that Meta’s VR headset, Ray-Ban AI headset, Muse Charm pendant, and Muse AI app would lift its revenue prospects. Traders instead bought shares of Microsoft (MSFT), Dell Technologies (DELL), and Qualcomm (QCOM).
In the medium term, leveraged firms risk a bigger correction. Oracle’s (ORCL) CDS (insurance on its bonds) rose to a record high. The firm declared a ‘force majeure’ on its data center project. That hurt Blue Owl (OWL) stock on Thursday.
