Stocks Fall as Bond Yields Rise on Economic Strength

Market Overview - The S&P 500 Index is down -0.83%, the Dow Jones Industrials Index is down -0.42%, and the Nasdaq 100 Index is down -1.16%, marking a decline for the third consecutive session [1][2] - Rising bond yields are negatively impacting stock prices, with the 10-year T-note yield reaching a 3-week high, up +2 basis points [2] Economic Indicators - US Q2 GDP was revised upward to +3.8% (quarter-over-quarter annualized), exceeding expectations of no change at +3.3% [3] - Q2 personal consumption was revised upward to +2.5%, surpassing expectations of +1.7% [3] - The Q2 core PCE price index was unexpectedly revised upward to +2.6%, compared to expectations of no change at +2.5% [3] - Weekly initial unemployment claims fell by -14,000 to a 2-month low of 218,000, indicating a stronger labor market than the anticipated increase to 233,000 [3] Capital Spending and Corporate Earnings - US August core capital goods new orders rose +0.6% month-over-month, stronger than expectations of no change, indicating robust capital spending [4] - Rising corporate earnings expectations are providing a bullish backdrop for stocks, with over 22% of S&P 500 companies guiding for Q3 earnings that are expected to exceed analysts' expectations, the highest in a year [5] - S&P companies are projected to achieve +6.9% earnings growth in Q3, an increase from +6.7% as of the end of May [5] Federal Reserve Commentary - Kansas City Fed President Jeff Schmid indicated that the Fed may not need to lower interest rates soon, describing the current policy stance as "slightly restrictive" due to high inflation and a balanced labor market [4]