U.S. stocks fell for the third straight day as a global bond market selloff intensified and tamped down enthusiasm for growth-oriented tech giants.  

The Nasdaq 100 fell 3.2 per cent in its worst three-day slide since February. Investors are losing faith that the Federal Reserve is done raising interest rates after minutes from the last meeting suggested officials are considering tighter policy. The 10-year Treasury yield rose as high as 4.33 per cent within a few basis points of its 2022 highs. 

So far the stock slump has been more muted than similar eras of elevated real rates, according to Tom Garretson, a senior portfolio strategist with RBC Wealth Management.

“Tech stocks — and certainly equities broadly — are feeling the weight of rising real yields, but thus far not to the extent that we have seen during past episodes of rising yields,” Garretson said in an interview. “During past periods over the last three years of similar rises in real yields, we have seen tech pull back by about 7 per cent to 15 per cent.”

Data from before the New York market opened showed the labor market remains healthy, doing little to change the narrative that more Fed tightening may be in store. 

“This week’s data hasn’t given them any reason to let their guard down,” said Mike Loewengart at Morgan Stanley Global Investment Office. “With housing starts, retail sales, and jobless claims all reinforcing the picture of a robust economy, another rate hike can’t be ruled out, even if the Fed remains on hold next month.”

Wall Street’s fear gauge, the Cboe Volatility Index or VIX, touched 18 for the first time in seven sessions. The VIX hasn’t reached above 30 — a level considered a sign of heightened volatility — since a series of bank failures rocked the market in March.

Investors will soon be turning to next week’s gathering of policy makers at Jackson Hole in Wyoming to gauge Fed sentiment. 

The moves across bond markets have been sharp and swift this week. Treasuries have been a key driver of the global debt selloff as resilience of the world’s largest economy defies expectations that a run of Federal Reserve interest-rate hikes would spark a recession.

 “Our baseline is the Fed will not likely alter rates at the next meeting but the following meeting decision is yet to be determined,” Jeffrey Roach, chief economist at LPL Financial, wrote. “Treasury yields are hitting new highs as investors reset expectations about long-term inflation.”

In the UK, the surge in gilt yields comes after sticky inflation and strong wage data boosted investor bets that the Bank of England will need to raise interest rates further to 6 per cent and keep them high for longer. Japan’s 20-year bond yield surged after a debt auction drew tepid investor demand.

China also continued to weigh on sentiment. The picture emerging from property agents and private data providers suggest the slump in the real estate market may be worse than official reports show. 

China ramped up its efforts to stem losses in its currency on Thursday by offering the most forceful guidance since October through its daily reference rate for the managed currency. Authorities told state-owned banks to step up intervention in the currency market this week, in a push to prevent a surge in yuan volatility, according to people familiar with the matter.

Meanwhile, the dollar took a breather from a five-day climb while the pound continued to outperform. Crude halted a three-day drop.

Key events this week

• Eurozone CPI, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.8 per cent as of 4:01 p.m. New York time
• The Nasdaq 100 fell 1.1 per cent
• The Dow Jones Industrial Average fell 0.8 per cent
• The MSCI World index fell 0.8 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at US$1.0871
• The British pound rose 0.1 per cent to US$1.2745
• The Japanese yen rose 0.4 per cent to 145.77 per dollar

Cryptocurrencies

• Bitcoin fell 3.7 per cent to US$27,872.76
• Ether fell 3.9 per cent to US$1,736.64

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.29 per cent
• Germany’s 10-year yield advanced six basis points to 2.71 per cent
• Britain’s 10-year yield advanced 10 basis points to 4.75 per cent

Commodities

• West Texas Intermediate crude rose 0.9 per cent to US$80.06 a barrel
• Gold futures fell 0.5 per cent to US$1,919.30 an ounce