Hopes that a rout in Treasuries has run its course are tempting some investors back into the U.S. stock market after a months-long selloff.
Traders work on the floor at the New York Stock Exchange in New York City, U.S., October 27, 2023. REUTERS/Brendan McDermid/File PhotoNEW YORK, Nov 3 - to 16-year highs. Higher yields offer investment competition to stocks while also raising the cost of capital for companies and households.Yields on the benchmark 10-year US Treasury, which move inversely to bond prices, are down about 35 basis points from 16-year highs hit in October.
Draho expects the S&P 500 to trade between 4,200 and 4,600 until investors determine whether the economy will be able to avoid a recession. The index was recently around 4,365. At the same time, the last two months of the year have tended to be a strong stretch for stocks, with the S&P 500 rising an average of 3%, according to data from CFRA Research. The best two weeks of the year for the index, during which it has risen an average of 2.2% - kicked off on Oct. 22, according to data from Carson Investment Research.
At the same time, betting on reversals in Treasuries has been a losing proposition for most of the year, during which rebounds in the U.S. government bond market have been followed by deeper selloffs. The 10-year Treasury yield is up around 125 basis points from its low for the year.
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