By Medha Singh and Purvi Agarwal
(Reuters) -Wall Street’s main indexes were subdued in light trading volumes on Thursday, as rising yields limited gains in equities, while investors looked for a year-end boost from the so-called Santa Claus rally.
Yields on U.S. government bonds inched higher across the board, with the yield on the benchmark 10-year Treasury note hitting its highest since early May at 4.64%.
Among megacap stocks, Amazon.com (O:) slipped 0.8%, while Meta Platforms (O:) shed 1% after the markets opened for trading following the Christmas Day holiday.
Most S&P sectors were lower, with consumer discretionary leading losses following a 0.5% drop.
“Now we’re at an inflection point on the Treasury yield, especially the 10-year … Any move higher and it tends to create equity market weakness,” said George Cipolloni, portfolio manager at Penn Mutual Asset Management.
At 11:27 a.m. the fell 24.18 points, or 0.06%, to 43,272.28, the lost 7.09 points, or 0.12%, to 6,032.95 and the lost 34.43 points, or 0.17%, to 19,997.26.
Markets in Europe, London and parts of Asia were closed on Thursday.
The three main indexes have hit multiple record highs this year on hopes of a lower interest rate environment and the prospects of artificial intelligence boosting corporate profits.
However, U.S. stocks have hit a speed bump in the final month of the year following an election-led rally in November as investors assess the Federal Reserve’s projection of fewer interest rate cuts in 2025.
Latest data showed the number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week, consistent with a cooling but still healthy U.S. labor market.
“We have come off of high interest rate policy and there’s a good chance we’ll still be cutting (rates) more. For the next year, it should be a positive outlook (for markets), unless we see signs the data is softening,” said Joe Tigay, portfolio manager of the Rational (LON:) Equity Armor Fund.
Markets are in a seasonally strong period – called the “Santa Clause rally” – a pattern attributed to low liquidity, tax-loss harvesting and investing of year-end bonuses.
The S&P 500 has gained an average of 1.3% in the last five trading days of December and the first two days of January since 1969, according to the Stock Trader’s Almanac.
The S&P 500 and the Nasdaq wrapped up Tuesday’s truncated session with a third straight day of gains, lifted by megacap and growth stocks.
Cryptocurrency-related stocks were down after bitcoin fell 2.6%. MicroStrategy fell 4% and Coinbase Global (NASDAQ:) was off 2.2%.
Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE and by a 1.35-to-1 ratio on the Nasdaq.
The S&P 500 posted two new 52-week highs and one new low while the Nasdaq Composite recorded 38 new highs and 46 new lows.
