Treasury yields are putting pressure on stocks again

This report is from today’s CNBC Daily Open, international markets bulletin. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. As you see? You can subscribe here.

Red starts with US markets
US stocks started with low sentiment all major indexes are down Thursday, rejection of previous gains. The US dollar index reached the highest level in more than two years. All over Europe Stoxx 600 index added 0.6%, to recover previous losses. Although oil and gas stocks showed an increase of 2.3%, the European banking index decreased by 0.3%.

Tesla supplies give back earnings
stocks Tesla fell 6.1% after the company reported total shipments for the fourth quarter of 2024 fell from year to year. Not only was Tesla’s first annual decline in deliveries, but the number was below expectations, according to consensus estimates compiled by StreetAccount. Delivery is the closest estimate of sales reported by Tesla.

Meta’s new president of global affairs
Meta Nick Clegg, the former UK deputy prime minister and president of global affairs, is being replaced by Joel Kaplan, the company’s current vice president of policy and former Republican Party staffer. It’s a sign of how tech companies are to place themselves For the newly elected US President Donald Trump’s administration coming to Washington.

The flow of Russian gas stops
Ukraine stopped supplying Russian gas to a number of European countries on New Year’s Day a highly anticipated moveRussia’s state energy giant Gazprom confirmed on Wednesday. European Commission he said he was working to ensure the 27-nation bloc was prepared for such a scenario – although some countries are more at risk than others.

(PRO) Feelings close to the level of euphoria
Investor optimism only grew despite a rough end to December. barometer monitored by Bank of America indicates that investor sentiment is close to euphoric levels, but this, on the contrary, a signal to sell. Savita Subramanian, the bank’s equity and quantitative strategist, explains what this means for investors.

The Dow Jones Industrial Average It retreated 0.36% S&P 500 It decreased by 0.22% Nasdaq Composite It lost 0.16%. Their loss on Thursday meant the S&P and Nasdaq closed lower for five straight sessions, their longest losing streak since April.

The likely culprit? Increased treasury revenues. After first dipping 10-year Treasury yield started to rise and was close to closing at 4.6% at 12pm US time. That came as stocks began to slide: The S&P 500 lost nearly 60 points between 12:00 p.m. and 1:00 p.m.

While the 10-year yield will eventually even out at the end of the day, sustained high yields are a threat to stocks because they are a safer way for investors to keep their money. When Treasurys can yield a guaranteed 4.6%, the risk of betting on stocks seems less attractive.

Treasurys may be more attractive this year, as analysts don’t expect the S&P to return to anywhere near the 23.31% gain seen in 2024. It is more likely to earn an average of 9% in 2025. CNBC Market Strategists Research released in December.

Given this background, stocks may not adequately compensate investors for the risks they take on by owning bonds.

Like Max Kettner, HSBCs The chief multi-asset strategist wrote in a note Thursday, “The Fed’s hawkish turn is triggering what we call the Danger Zone, sending yields higher further.”

However, Kettner believes the market rush now “should create attractive entry points given the fundamentals are still on solid footing – we think (the first half of 2025) will bring the right Goldilocks backdrop”.

Even the highway leading to the danger zone must eventually lead beyond it to another destination.

— CNBC’s Lisa Kailai Han, Sarah Min, Jesse Pound and Christina Cheddar Berk contributed to this report.