US stock market: Dow snaps longest winning streak since 1987
Dow since 1987. The Nikkei newspaper reported the central bank will maintain its 0.5% cap for the 10-year government bond yield, but discuss allowing long-term interest rates to rise above that level by a certain degree. Reuters confirmed the central bank may make minor tweaks to extend the lifespan of its yield control policy.
Michael Green, chief investment strategist at Simplify Asset Management, said reports of the Bank of Japan's plans were the biggest driver behind Wall Street's performance on Thursday. Higher rates in Japan pushed the U.S. 10-year yield over 4% and reduced the attractiveness of stocks.
The Dow Jones Industrial Average fell 237.4 points, or 0.67%, to 35,282.72, the S&P 500 lost 29.29 points, or 0.64%, to 4,537.46 and the Nasdaq Composite dropped 77.18 points, or 0.55%, to 14,050.11. On Wednesday, the U.S. Federal Reserve raised interest rates by 25 basis points as expected.
Traders now only see a 20% chance that the Fed could surprise with a quarter-point increase in September. Fed Chair Jerome Powell said on Wednesday that Fed staff are no longer forecasting a U.S. recession, but did not rule out another rate hike, saying the Fed would follow future economic data.
On Thursday, a Commerce Department report showed the U.S. economy grew faster than expected in the latest quarter, with an advance gross domestic product reading of 2.4%, above the 1.8% forecast by economists polled by Reuters. Kim Rupert, managing director of global fixed income at Action Economics in San Francisco, said the strong economic data earlier in the day also made the market reassess its positioning after the Federal Reserve slightly upgraded its growth outlook on Wednesday.
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