Dow now negative for year as rising yields hit stocks

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As bond yields climb to 16 year highs, investors are trading stocks for low to no risk options creating headwinds for the Dow, S&P 500 and Nasdaq Composite.

UBS Private Wealth Management financial adviser Sarah Ponczek and Lou Basenese discuss how rising interest rates and inflation are impacting markets on 'Mornings with Maria.'"That’s why we are seeing the selloff. How high do rates go?" Mark Murphy, Rosecliff founder and managing partner, said during an interview on FOX Business’ "Varney & Co." A stronger-than-expected JOLTS report raised fears that the Federal Reserve will continue raising interest rates.

Exchange traded funds that track bond prices, which trade inversely to yields, have fallen to multi-year lows for the iShares 20+ year Bond ETF and iShares TIPS Bond ETF, the lowest since August 2007 and April 2010, respectively. For investors, according to Teddy Weisberg of Seaport Securities, hitting the sidelines is the best course of action.

"We've seen this interest rate momentum coming for months and all of a sudden its come home to roost" he said. "Investors have simply awakened to the environment we are in and all of a sudden 5.5% risk-free in Treasuries or even the money market funds…doing nothing now means you can earn a pretty good return on your money compared to where we were the last 10-12 years in a zero interest rate environment" Weisberg added.

Friday’s monthly employment report for September could serve as another market driver. Employers are expected to have added 170,000 positions last month, slightly below the 187,000 from the prior month. The unemployment rate is expected to tick up to 3.8% from 3.7%.

 

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