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U.S. Treasury bond yields rise — and stock markets fall — on January’s jobs report


Sean Gallup | Getty Images News | Getty Images

This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

What you need to know today

  • Dell plans to lay off 6,650 employees, or 5% of its workforce, according to an SEC filing. It joins a host of tech companies announcing layoffs in January, such as PayPal, Google and Salesforce.
  •  PRO U.S. stocks had a stellar January, but many analysts are warning investors to be cautious. “Recession risks are merely postponed rather than diminished,” a JPMorgan analyst wrote.

The bottom line

U.S. stock markets are feeling the price of more expensive money.

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January’s U.S. jobs report was so astoundingly positive on all fronts that it raised the prospect of more interest rate hikes later in the year. U.S. treasury yields, accordingly, climbed. The yield on the 10-year Treasury was up by nearly 12 basis points at 3.651%  ̶  its highest since Jan. 11. The 2-year Treasury yield was trading at 4.485% after climbing more than 18 basis points.

The Nasdaq Composite posted the biggest loss of all three indexes, sliding 1% to end at 11,887.45. The S&P 500 edged down by 0.61%, and the Dow Jones Industrial Average dipped fractionally by 0.1%.

Not all is bad news, though. “Creative destruction” is the process by which existing practices are dismantled and replaced by new ones that increase productivity. Joseph Schumpeter, the economist who coined the term, used Henry Ford’s assembly line as an example. We may be witnessing this mechanism in motion now.

Google on Monday announced a new artificial intelligence chatbot technology named Bard. It comes after the company developed a “code red” plan to respond to ChatGPT, the wildly popular AI-chatbot that received a multibillion-dollar investment from Microsoft. Is it creative destruction? Time will tell whether Bard is music to the ears of investors who have been disappointed by Google’s declining revenue in its search business, and will usher in a new age of AI-driven innovations for the broader markets.

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