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GLOBAL MARKETS-Stocks fall for fifth day as U.S. 10-year debt yield tops 3 percent

Published 26/04/2018, 04:20 am
© Reuters.  GLOBAL MARKETS-Stocks fall for fifth day as U.S. 10-year debt yield tops 3 percent
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* MSCI world index falls for 5th day running

* U.S. benchmark bond yields rise past 3 pct, 2011 highs next focus

* Wall Street slips; Facebook earnings after the close (Adds close of European markets)

By Chuck Mikolajczak

NEW YORK, April 25 (Reuters) - A gauge of global equities was on track for its longest losing streak this year on Wednesday as 10-year U.S. Treasury yields again topped the 3 percent mark, stoking concerns about rising costs that could dampen corporate profits.

The benchmark 10-year note yield edged up to 3.033 percent as jitters about growing federal borrowing spurred more selling in U.S. government debt. Should it climb above 3.041 percent, its peak in January 2014, it will likely move into territory last seen in summer 2011. 10-year notes US10YT=RR last fell 14/32 in price to yield 3.0334 percent, from 2.983 percent late on Tuesday.

The climb in yields has dented demand for equities, with major Wall Street indexes dropping more than 1 percent on Tuesday. In addition, large companies such as Caterpillar (NYSE:CAT) CAT.N have warned about increased costs from rising metals prices.

U.S. stocks were slightly lower in a choppy session, recovering from earlier declines that sent the S&P 500 down as much as 0.8 percent.

The Dow Jones Industrial Average .DJI fell 16.13 points, or 0.07 percent, to 24,008, the S&P 500 .SPX lost 3.46 points, or 0.13 percent, to 2,631.1 and the Nasdaq Composite .IXIC dropped 15.79 points, or 0.23 percent, to 6,991.56.

Rising debt yields could prompt portfolio managers to weigh moving money into safer fixed-income securities at the expense of riskier assets like stocks and emerging markets as the Federal Reserve continues on its path to raise benchmark U.S. interest rates. earnings reports that are coming out, the focus is on the forward guidance for where the interest rate environment is going," said William Norris, chief investment officer at CIBC Bank USA.

"We knew that earnings were going to be very good and people are looking beyond the first quarter."

The rise in yields overshadowed earnings from Kering (PA:PRTP) and Credit Suisse (SIX:CSGN) in Europe, sending the pan-European STOXX 600 .STOXX to its lowest close in a week, down 0.8 percent. pan-European FTSEurofirst 300 index .FTEU3 lost 0.75 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.50 percent.

MSCI's index was poised for its fifth straight decline, its longest losing streak since November.

But concerns about inflation-induced costs were allayed somewhat by results from Boeing (NYSE:BA) BA.N , up 3.7 percent. The aerospace company's profit jumped by more than half in the first quarter, surging past Wall Street forecasts, and Boeing said margins had improved at the start of 2018. season has gotten off to a stronger start than was initially expected, with the growth rate for the quarter currently at 22 percent, according to Thomson Reuters data. The earnings growth expectation was 18.5 percent at the start of April and 12.2 percent at the start of the year.

All eyes will be on scandal-hit social media firm Facebook FB.O , down 0.2 percent, when it reports results after the closing bell.

The rally in bond yields pushed the dollar to a four-month high of 91.241 against a basket of major currencies and led investors to consider whether the greenback was breaking out of a prolonged weak spell. dollar index .DXY rose 0.48 percent, with the euro EUR= down 0.47 percent to $1.2172.

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