Wall St ends red, Treasury yields climb on dour guidance and looming recession fears

© Reuters. FILE PHOTO: People pass by an electronic screen showing Japan's Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato/File Photo

By Stephen Culp

NEW YORK (Reuters) - Wall Street closed lower on Wednesday, marking the end of a multi-session rally, and Treasury yields spiked as gloomy data and downbeat corporate outlooks tossed cold water on investor risk appetite.

All three major U.S. stock indexes lost ground, while the benchmark Treasury yield shot up to touch a new 14-year high.

"It's partly a pause after the rally, some concern over higher-than-expected inflation in great Britain, and some companies expressing caution about the outlook going forward," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "The market is taking a breather."

Market participants balanced a string of mixed company earnings, notably from Procter & Gamble (NYSE:PG), Travelers Companies (NYSE:TRV) Inc, and Baker Hughes Co, against ongoing concerns over whether central bank interest rate hikes to contain inflation could push the global economy into contraction.

"The market is still unsure as to when the Fed is going to recognize what they've done to date is beginning to take effect," said David Keator, partner at the Keator Group, a wealth management firm in Lenox, Massachusetts. "The Fed is taking its mandate of tackling inflation seriously, but there’s been chatter of tightening too much."

The Dow Jones Industrial Average fell 99.99 points, or 0.33%, to 30,423.81, the S&P 500 lost 24.82 points, or 0.67%, to 3,695.16 and the Nasdaq Composite dropped 91.89 points, or 0.85%, to 10,680.51.

Data showing UK inflation hitting 10.1% in September pushed European stocks to break their recent winning streak.

The pan-European STOXX 600 index lost 0.53% and MSCI's gauge of stocks across the globe shed 0.89%.

Emerging market stocks lost 1.62%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.65% lower, while Japan's Nikkei rose 0.37%.

A sell-off in U.S. government bonds pushed the benchmark Treasury yield to its highest level since mid-2008 on expectations of continued aggressive interest rate hikes from the Federal Reserve.

Benchmark 10-year note were last at 4.1272%, from 3.998% late on Tuesday.

The 30-year bond yield was 4.1259%, from 4.021% late on Tuesday.

The dollar rebounded from two-week lows as hotter-than-expected UK inflation data fueled recession worries, which dragged down the sterling and helped support the greenback against a basket of world currencies.

The dollar index rose 0.7%, with the euro down 0.83% to $0.977.

The dollar also touched a 32-year peak against the yen, hovering close to a level that some believe could trigger intervention by Japan.

The Japanese yen weakened 0.40% versus the greenback at 149.88 per dollar, while sterling was last trading at $1.122, down 0.87% on the day.

Crude prices edged higher on tighter supply conditions, bouncing back after hitting two week lows in the wake of U.S. President Joe Biden's plans to release oil from strategic reserves.

U.S. crude rose 3.30% to settle at $85.55 per barrel, while Brent settled at $92.41 per barrel, up 2.64% on the day.

Dollar strength weighed on gold, sending prices for the safe-haven metal to a three-week low.

Spot gold dropped 1.4% to $1,628.61 an ounce.