Bond market takes a bite out of stocks today

The yield on the 10-year Treasury rose another basis point today, after climbing yesterday, to 3.19%. The yield on the 2-year Treasury climbed to 2.88%, up 4 basis points.

A lower than expected report on initial claims for unemployment helped fuel the climb in yields. For the week ended on September 29, initial claims for unemployment fell to 209,000 from 215,000 in the prior week. Economists surveyed by had projected a drop to 210,000. The larger than expected drop fed into worries that tomorrow’s job report for September would be stronger than expected and thus add to the odds that the Federal Reserve will carry through on its indication that it will raise interest rates three times in 2019–after another 2018 interest rate increase in December.

At 3:20 p.m. New York time the Standard & Poor’s 500 was off 0.87% and the Dow Jones Industrial Average was lower by 0.80%. The NASDAQ Composite saw a bigger drop of 1.80% as technology stocks sold off. The Technology Select Sector SPDR ETF fell 1.96%.

Energy stocks were lower too with the Energy Select Sector SPDR ETF down 0.37% on a report from the U.S. Energy Information Administration of a larger than expected increase in U.S. crude inventories of 8 million barrels. Analysts surveyed by Reuters had expected a build of 1.98 million barrels.

Even financials, which often climb when interest rates move higher, were off day with the Financial Select Sector SPDR ETF down a relatively modest 0.64%. The dollar was up a surprisingly tiny 0.01% on the upward move in bond yields.