- Stocks closed flat on Thursday after swinging from losses to gains, while bond activity indicated worries about the U.S.’ fiscal future. Markets remain queasy as Republicans in the House of Representatives passed a bill that would dramatically increase the U.S. deficit and potentially boost inflation.
Stock markets closed essentially flat on Thursday after having recovered from the worst selloff in a month the day before, sparked by investor worries about the U.S.’ fiscal future.
The S&P 500 lost 0.4%. The Dow lost 1 point to close flat, while the tech-heavy Nasdaq gained 0.3%.
Bond yields spiked earlier in the day before steadying. The yield on the 10-year Treasury hit 4.63% before falling to 4.54%. The yield on the 30-year Treasury surged to 5.15%, its highest level in more than a year, before falling to 5.05%.
The spikes reflect investor worries that the $4.5 trillion package of tax cuts and spending House Republicans passed Wednesday morning would add to the U.S.’ already hefty government debt. T
“[U]nless the bill is watered down by the Senate, there is clearly a risk of yields rising even further,” said John Higgins, chief markets economist at Capital Economics.
The nation’s ballooning deficit led credit-rating agency Moody’s to downgrade U.S. debt last Friday. The cut means the U.S. no longer has a top credit rating from any agency.
Stocks meandered in trading before closing slightly higher. Some large tech company stocks rose, pulling up indexes. Alphabet gained 2%, Amazon rose 1.5%, and Meta gained 0.6%.
Solar stocks sank, with Sunrun plunging 37.5%, Enphase Energy losing 17.8%, and First Solar falling 4.6%. The budget bill in the House would strip Biden-era incentives for clean energy.
Economic data continued to come in mixed. A pair of National Association of Realtors reports indicated that existing home sales for April fell to the lowest level in 15 years, weighed down by still-high housing prices and unaffordable mortgage rates.
However, a government report revealed fewer Americans applied for jobless aid last week than expected, showing the labor market continues to hold steady in a shifting policy environment. And a survey of purchasing managers showed manufacturing activity rose from April to May.
“[B]usiness confidence has improved in May from the worrying slump seen in April, with gloom about prospects for the year ahead lifting somewhat,” said Chris Williamson, chief economist at S&P Global Market Intelligence. “However, both sentiment and output growth remain relatively subdued.”