Dow drops 39 points as 10-year treasury bond yield hits five-year high

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April 18 (UPI) — U.S. markets fell slightly on Monday as the 10-year treasury bond yield climbed to a five-year high as investors awaited more quarterly earnings results.

The Dow Jones Industrial Average fell 39.54 points, or 0.11%, while the S&P 500 slipped 0.02% and the Nasdaq Composite closed down 0.14%.

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Stocks ebbed and flowed in a choppy session, but settled in the red as the benchmark 10-year treasury yield traded at 2.884% at one point, its highest level since 2018. The yield began March at 1.71%, but has spiked amid plans for the Federal Reserve to tighten its monetary policy.

“The big concern is how consistently and how far the 10-year note will rise,” Sam Stovall, CFRA’s chief investment strategist said, according to CNBC.

“Nothing is really new on the Ukraine front, nothing is really new on the inflation front, the Fed is expected to raise by 50 basis points at its next meeting. So, really, the question is, what are the bonds doing?”

Software companies declined as investors turned away from growth-oriented stocks amid the rising yields, with Zoom Video dropping 4.14%, Datadog declining 3.62%, Okta falling 2.69% and Workday easing 2.3%.

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Conversely, shares of Google parent, Alphabet, rose 0.75%, Facebook parent, Meta, gained 0.28% and Microsoft climbed 0.25% as the mega-cap tech companies softened the blow.

Shares of Twitter were up 7.4% after the company announced Friday that its board had adopted a limited duration shareholder rights plan or “poison pill” in response to billionaire Elon Musk’s offer to buy the company for $43 billion.

Bank of America stock rose 3.41% as it reported a 13% year-over-year drop in earnings per share in the first quarter, but slightly beat expectations.

Investors are awaiting a slew of other high-profile earnings this week from companies such as United Airlines, American Express, Netflix and Tesla.

So far, 7.5% of S&P 500 companies have reported, and 77% have exceeded Wall Street’s earnings per share estimates, matching a five-year average for topping analysts’ estimates, according to FactSet.

“I do think that we’re potentially in for a tough earnings season, only because when people gave guidance [last quarter], the input costs have clearly gotten worse than they expected,” Rhys Williams, Spouting Rock Asset Management chief strategist, told Yahoo Finance.

Monday also saw the World Bank announce it plans to spend $170 billion to ease a projected worldwide economic slowdown amid Russia’s war in Ukraine.

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Natural gas futures rose 5% intraday, rising above $8 per million British thermal units for the first time since 2008 amid the conflict, as Russia has served as a key natural gas supplier to Western Europe.