Investing.com - Worries over surging Treasury yields combined with anxiety among investors that corporate earnings will peak this season have led to calls that the current bull market party on Wall Street is finally coming to an end.
The 10-year U.S. Treasury yield rose to its highest level since January 2014 at 3.035% on Wednesday, approaching peaks that have triggered market spasms in the past.
The next key technical level for the 10-year yield is 3.05%, which would put the yield at its highest level since 2011.
Rising bond yields are fueling fears that portfolio managers may move money into safer fixed-income securities at the expense of riskier assets, such as stocks.
Treasury yields have been driven steadily higher this year by a combination of concerns over inflation, growing debt supply, and rising Federal Reserve borrowing costs.
Meanwhile, another factor adding to the bearish environment, are fears that corporate earnings are at a peak after Caterpillar (NYSE:CAT), a bellwether for global economic activity, said the first quarter was likely to be as good as it is going to get for its earnings.
That fed into worries that U.S. earnings growth is broadly set to decline as the economy passes peak activity.
The U.S. stock market has performed strongly over the past nine years after the global financial crisis unleashed a wave of monetary stimulus from the Federal Reserve designed to support economic growth.
Morgan Stanley (NYSE:MS) recently warned that investors hoping for another leg to the bull market are likely to be disappointed.
"The feelgood aspects of tax cuts and aggressive government spending plans appear at or nearly in the price of U.S. markets, whereas the downsides are less accounted for," the 31-page research paper said.
So far in 2018, it seems that market players are no longer buying the dip in stocks like they did in recent years. Instead, rallies are being sold – a worrying sign for the bulls.
Results later today from Amazon (NASDAQ:AMZN), as well as from Apple (NASDAQ:AAPL) next week, are now set up to be the next major events in determining whether the bull market will continue or if they party is over.
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