Equities Halt Rally, As Yields Rise Following Weak Bond Sale – US Market Wrap

Wall Street ended a rally that drove equities to the edge of a record amid worries about an overheated market. Treasuries lost steam as a weak sale of 30-year bonds signalled fading desire for US debt after a recent surge.

After an almost 30% surge from its April lows, the S&P 500 closed little changed. A closely observed gauge of chipmakers rose, but Intel declined 3% as Trump called on its chief to resign, citing conflicts of interest. Eli Lilly slipped 14% after disappointing data on its new weight-loss pill. Apple continued a two-day surge to about 8.5%.

Thursday’s $25 bln Treasury sale followed weak results for 3- and 10-Yr debt auctions this week. Long-end gains slowed, leaving 30-Yr yields little changed at 4.83%. The yield on 10-yr bonds climbed two basis points to 4.25%. The dollar barely moved.

Whether or not the blistering rally in US stocks is about to cool, some large businesses have cautioned clients to prepare for a near-term pullback amid sky-high valuations. Added to bulls’ worries is seasonality. August and September have historically been the two worst months for the S&P 500.

Earlier gains in equities were pushed by hopes of a de-escalation of geopolitical risks after Russia said Putin and Trump are finalising details for a meeting. Stocks were also bolstered by Trump’s vow to exempt businesses that move production to the USA after stating plans for a 100% tariff on semiconductor imports.