{"id":68802,"date":"2023-10-04T19:30:07","date_gmt":"2023-10-04T23:30:07","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/stock-market-likely-to-correct-if-10-year-treasury-yield-reaches-5-rbc-says\/"},"modified":"2023-10-04T19:30:10","modified_gmt":"2023-10-04T23:30:10","slug":"stock-market-likely-to-correct-if-10-year-treasury-yield-reaches-5-rbc-says","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=68802","title":{"rendered":"Stock market likely to correct if 10-year Treasury yield reaches 5%, RBC says"},"content":{"rendered":"
\n

U.S. stocks probably can\u2019t resume their rally from the lows of last October until the recent sharp rise in longer-dated Treasury yields reverses, according to Robert Sluymer, technical strategist at RBC Wealth Management.<\/p>\n

He pointed to the 10-year Treasury yield\u2019s
\n BX:TMUBMUSD10Y
\n recent push above a critical 4.3% level to 4.8% on Tuesday as \u201cprematurely\u201d cutting off an 11-month upswing for stocks that began in the fourth quarter of 2022.<\/p>\n

\n

\u201cRising interest rates and a rising U.S. dollar
\n DXY
\n remain major headwinds for equities that will need to reverse for equities to bottom,\u201d Sluymer wrote, in a Tuesday client note. <\/p>\n

\u201cLooking back at the long-term relationship between U.S. stocks and interest
rates, a move above 4.5%-5% by the U.S. 10-year yield has proven to be an important headwind for the secular uptrend for equities.\u201d<\/p>\n

Read:<\/strong> Rising Treasury yields are upsetting financial markets. Here\u2019s why. <\/p>\n

While the Dow Jones Industrial Average
\n DJIA
\n tends to move in secular bull cycles every 17 years, Sluymer also found stocks have come under stress in the past when the 10-year Treasury yield was between 4.5% and 5%. <\/p>\n

<\/p>\n

<\/p>\n

<\/p>\n<\/figure><\/div>\n

\u201cPut differently, the equity market is likely to correct should rates push above 5%,\u201d he said. But the 10-year Treasury yield\u2019s uptrend also will need to show meaningful \u201cevidence of a reversal\u201d to support any equity-market bottom.<\/p>\n

The Dow on Tuesday skidded 1.3%, posting its worst daily drop since the March banking crisis, cementing its lowest close since late May at 33,002, and erasing its gains for 2023, according to Dow Jones Market Data. <\/p>\n

The S&P 500 index
\n SPX
\n fell 1.4% to 4,229, its lowest finish since June 1, while the Nasdaq Composite Index
\n COMP
\n ended 1.9% lower at 13,059. <\/p>\n

Analysts have been flagging the 4,200 level for the S&P 500 as an important test of support. Sluymer said another key support level would be near 4,000. \u201cA break below that level would signal the 2023 cycle rebound is failing,\u201d he said. <\/p>\n

Related:<\/strong> Entire U.S. Treasury yield curve moves toward or above 5%, raising risk something may break<\/p>\n

A correction in the stock market is commonly considered a retreat of at least 10% for an index from its recent peak, but not more than 20%.<\/p>\n

\u2013-William Watts contributed to this article<\/em><\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

U.S. stocks probably can\u2019t resume their rally from the lows of last October until the recent sharp rise in longer-dated Treasury yields reverses, according to Robert Sluymer, technical strategist at RBC Wealth Management. He pointed to the 10-year Treasury yield\u2019s BX:TMUBMUSD10Y recent push above a critical 4.3% level to 4.8% on Tuesday as \u201cprematurely\u201d cutting […]<\/p>\n","protected":false},"author":1,"featured_media":68803,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-68802","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nStock market likely to correct if 10-year Treasury yield reaches 5%, RBC says | iFintechWorld<\/title>\n<meta name=\"description\" content=\"U.S. stocks probably can\u2019t resume their rally from the lows of last October until the recent sharp rise in longer-dated Treasury yields reverses,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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