Dow ends up to extend win run to five; rising yields pressure megacap stocks By Reuters

Written by David French

(Reuters) – The index closed slightly higher on Thursday, extending its winning streak to five sessions despite light trading volumes and higher U.S. Treasury yields weighing on some of the dominant technology giants.

While the and and indices were broadly unchanged, both indices ended slightly in negative territory. This snapped a four-session closing high for the Nasdaq, and ended the S&P 500’s three-session rally.

On a day filled with little stimulus, investors responded to yields on U.S. government bonds rising slightly, including the yield on the benchmark 10-year Treasury note that reached its highest level since early May at 4.64% earlier in the session.

However, a strong auction of seven-year notes in the early afternoon helped yields fall slightly, with 10-year notes reaching 4.58% in late afternoon trading.

Higher yields are traditionally seen as a negative for growth stocks, because they raise their cost of borrowing to finance expansion. As the markets are increasingly dominated by giant technology stocks known as the Magnificent Seven, a reduction in their performance – especially in lieu of other market catalysts – will put downward pressure on benchmark indices.

The Standard & Poor’s 500 index fell 2.45 points, or 0.04%, to 6,037.59 points, while the Nasdaq Composite index lost 10.77 points, or 0.05%, to 20,020.36 points. The Dow Jones Industrial Average rose 28.77 points, or 0.07%, to 43,325.80 points.

Six of the major companies fell, with Tesla (NASDAQ:) leading the decliners, down 1.8%. Apple (NASDAQ:) was the only company to rise by 0.3% and continued to approach becoming the world’s first company to reach $4 trillion in market value.

Shares of giant technology companies fell somewhat in the summer, as investors sought to shift some capital into other sectors that offer greater value. Since the US election in November, these stocks have resumed their rise and outperformed the equalized version of the S&P 500, said Adam Turnquist, chief technical strategist at LPL Financial (NASDAQ:).

“As a technician, what you want to see are breakouts in absolute and relative terms, and Mag 7 is checking the boxes there, so very constructive leadership heading into the end of the year,” he said.

The three major indexes have hit multiple record highs this year amid hopes for a low interest rate environment and the potential for artificial intelligence to boost corporate profits.

However, US stocks saw a rapid rise in the final month of the year following an election-led rally in November, as investors weigh the Fed’s expectations of smaller interest rate cuts in 2025.

Looking ahead, LPL Financial’s Turnquist said the past few weeks have seen heavy reliance on Magnificent Seven shares sending markets higher, and we may be starting to see cracks in that momentum. Therefore, in order to see further increases in the benchmark index, we will need to see inputs from other sectors of the economy.

The number of Americans filing new claims for unemployment benefits fell to the lowest level in a month last week, one data released Thursday showed, consistent with a cool but still healthy U.S. labor market.

Markets go through a strong seasonal period – called the “Santa Claus Rise” – a pattern that is attributed to low liquidity, tax loss harvesting, and investing year-end bonuses.

The S&P 500 rose an average of 1.3% in the last five trading days of December and the first two days of January since 1969, according to Stock Traders Almanac.

Cryptocurrency-related stocks fell after falling by 3.9%. MicroStrategy, Mara Holdings and Coinbase International (NASDAQ:) were all down between 1.9% and 4.8%.

Among the 11 S&P 500 sectors down were consumer discretionary, which fell 0.6%, and the energy index, which fell 0.1%, tracking marginal weakness in prices. [O/R]