Wall Street slips as Cisco drags, bond yields rise

A Wall Street sign in the rain outside the New York Stock Exchange in New York June 9, 2014. — Reuters pic
A Wall Street sign in the rain outside the New York Stock Exchange in New York June 9, 2014. — Reuters pic

NEW YORK, May 17 — Wall Street’s main indexes dropped today as US bond yields climbed to a seven-year high and Cisco’s forecast disappointed, while looming Sino-US trade talks added to the jitters.

Shares of Cisco fell 3.6 per cent and were the biggest drag on all the three major indexes, after the company’s forecast indicated its transition to a software-focused business was a work in progress.

Also weighing was Walmart’s 1.8 per cent fall. The stock was up in premarket trading after the retailer posted a rebound in its US e-commerce business and beat profit estimates.

Ten-year US Treasury yields hit a high of 3.1 per cent as more expensive oil pointed to faster inflation and followed some upbeat US retail sales numbers.

“There’s a lot of chatter that the 10-year is somehow going to explode to the upside, that’s why it’s getting everybody’s attention,” Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.

“There is a lot of worry out there that might be reflected in the market... and trade is the icing on the cake.”

The United States and China will resume negotiations over the next two days to resolve their differences over trade, and officials from both sides have recently signalled that they are looking for a deal.

Japan is considering tariffs on US exports worth US$409 million in retaliation against US-imposed steel and aluminium import tariffs, according to media reports.

At 9.52am EDT the Dow Jones Industrial Average was down 61.23 points, or 0.25 per cent, at 24,707.70, the S&P 500 was down 2.02 points, or 0.07 per cent, at 2,720.44 and the Nasdaq Composite was down 8.43 points, or 0.11 per cent, at 7,389.86.

Six of the 11 main index groups were in negative territory.

Leading the gainers was the energy sector, which rose 0.9 per cent after Brent crude prices hit US$80 per barrel for the first time since November 2014.

Wells Fargo dropped 1.3 per cent, weighing on financials, after the Wall Street Journal reported that some bank employees altered information on business customers’ documents.

J.C. Penney Co tumbled 6.7 per cent after its same-store sales missed estimates and the company warned it could post a loss this year.

Coca-Cola rose 1.4 per cent after Barclays upgraded the stock to “overweight.”

Advancing issues outnumbered decliners by a 1.54-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and two new lows, while the Nasdaq recorded 48 new highs and 11 new lows. — Reuters