Dow Turns Negative for 2023 as Surging Yields Weigh on Stocks

Investing.com — The Dow Jones Industrial Average experienced a decline on Tuesday, falling into negative territory for the year, following unexpected strength in the labor market which heightened concerns regarding potential increases in Federal Reserve interest rates. This shift pushed Treasury yields to multi-year highs.

The Dow dropped 1.3%, equivalent to 430 points, while the S&P 500 fell 1.9% and the Nasdaq Composite decreased by 1.3%.

### Labor Demand Surges Unexpectedly

According to the U.S. Labor Department’s latest Job Openings and Labor Turnover Survey (JOLTs), job openings in August surprisingly rose to approximately 9.6 million, defying expectations that they would decrease to around 8.8 million.

This indication of a still-restricted labor market intensified concerns that the Fed may need to raise rates again this year, prompting 10-year and 30-year Treasury yields to reach their highest levels since 2007, reflecting anticipation of sustained high rates. Additionally, U.S. government bond prices have been under pressure due to an increase in Treasury supply, as the government accelerated borrowing amid a growing deficit.

The latest rise in Treasury yields occurred even as Raphael Bostic, President of the Atlanta Fed, remarked that there wasn’t a pressing need for the Fed to raise rates again.

### Technology Sector Faces Renewed Selling

The technology sector, which had briefly rebounded earlier, saw a decline led by major players such as Microsoft Corporation and Meta Platforms Inc. Meta faced additional pressure following reports that it is considering implementing a $14 monthly fee for users who wish to access an ad-free version of Facebook or Instagram.

This development is compounded by a European court ruling from July that mandates user consent for personalized advertisements under EU data protection rules, posing a threat to Meta’s advertising revenue, which is a significant part of its earnings.

The broader technology sector continues to be influenced by rising Treasury yields, which diminish the attractiveness of growth-oriented investments.

### McCormick Reports Mixed Earnings

McCormick & Company Incorporated saw its stock decrease by over 8% despite increasing its full-year earnings guidance. The spice manufacturer reported third-quarter revenue that fell short of analysts’ expectations.

The company indicated that special charges related to organizational and streamlining efforts are likely to reduce earnings per share (EPS) by $0.16 in 2023. However, when excluding these charges, adjusted EPS is expected to range from $2.62 to $2.67, an upward revision from the previous guidance of $2.60 to $2.65.

### Energy Stocks Decline as Oil Prices Rebound

Energy stocks slipped by less than 1% as oil prices regained strength after a previous decline. This helped to moderate losses in advance of the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, which is set for Wednesday.

Companies such as Valero Energy Corporation, Phillips 66, and Marathon Petroleum Corp were among the notable decliners.

RBC mentioned in a note that no significant changes to production policy are anticipated from OPEC during the upcoming meeting, despite a nearly 9% price increase since their monitoring session in August.