Stock Rally Holts as Weak Bond Sale Disrupts Trading – US Market Wrap

A rapid drop in US stocks following a weak $42 billion sale of Treasuries highlighted the fragility of markets in the aftermath of historical volatility.

Following an equity rally fuelled by the Bank of Japan’s dovish signals, the S&P 500 erased its gains. Investors avoided the 10-year US bond auction, which produced a yield that was significantly higher than the pre-sale indicative level. The weaker-than-expected demand indicated that the recent rally may have run its course. Treasuries were also under pressure as 17 blue-chip companies offered $31.8 billion in debt, the largest amount of US investment-grade issuance this year.

The S&P 500 fell 0.8% after rising nearly 2% earlier in the session. Nvidia led megacap losses. Super Micro Computer fell on disappointing earnings. Airbnb plummeted on a bleak outlook. Micron Technology is resuming its buyback program.

Treasury 10-year yields increased six basis points to 3.95%. The Japanese yen dropped 2%. Mexico’s peso led a rally in emerging markets, relieving pressure on currencies that had been battered as investors abandoned yen-backed bets on riskier assets.