Stock Market Today: Stocks Fall as Treasury Yields Spike

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published 21 September 2023

Stocks continued their post-Fed slump Thursday, with all 11 S&P 500 sectors finishing in the red.

While the central bank held rates steady at its September meeting, it left the door open for another rate hike by year's end – news that sent Treasury yields spiking to levels not seen in nearly two decades.

Indeed, the 2-year Treasury yield topped out at 5.202% in intraday trading, its highest mark since mid-2006. And the yield on the 10-year Treasury closed at its loftiest perch since the summer of 2007.

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The surging yields turned up the heat on the rate-sensitive tech sector with chipmakers Nvidia (NVDA, -2.9%), Advanced Micro Devices (AMD, -4.2%) and Arm Holdings (ARM, -1.4%) all ending Thursday with noteworthy losses.

Cisco to buy cybersecurity firm Splunk

One tech stock that went against the grain was Splunk (SPLK). Shares surged 20.8% on news that Cisco Systems (CSCO) will purchase the cybersecurity software firm for $28 billion in cash, making this the networking equipment specialist's biggest acquisition to date. The blue chip stock, on the other hand, slumped 3.9%.

"The new $28 billion bid is a 40% increase from just 18 months ago [when Cisco offered to buy Splunk in February 2022 for $20 billion], which both shows the operational efficiencies that Splunk has created under their new CEO Gary Steele," says Third Bridge analyst Joseph Brunetto. "The acquisition also aligns with Cisco's M&A strategy to bolster their cybersecurity offering."

FedEx stock pops after earnings

FedEx (FDX) was another stock that traded higher, adding 4.5% after the logistics giant disclosed earnings. In its fiscal first quarter, FedEx reported higher-than-expected earnings of $4.55 per share on in-line revenue of $21.7 billion. The company also lifted its full-year earnings forecast.

"For now, FDX is combating waning revenues with cost cuts, but it is also planning to help restore pricing," says CFRA Research analyst Stewart Glickman, who reiterated a Hold rating on the industrial stock. Going forward, the analyst believes there is risk involved with the company's planned January rate increases due to a "beleaguered consumer" and "tenuous macro environment."

Also in focus were Fox Corp. (FOX, +3.0%) and News Corp. (NWSA, +1.3), with both stocks gaining ground following reports Rupert Murdoch will step down as chair of the two media outlets in November, and be appointed as chairman emeritus. The media mogul will be replaced by his son, Lachlan Murdoch.

"This leadership transition comes at a challenging time for Fox," says Third Bridge analyst Jamie Lumley. "Following the Dominion Voting Systems settlement earlier this year, the potential liability from the Smartmatic lawsuit still hangs over the company." The analyst adds that questions also remain on how Fox will handle coverage of the 2024 election cycle, "a year which will be flush with political ad dollars."

As for the major indexes, the tech-heavy Nasdaq Composite shed 1.8% to 13,223, the broader S&P 500 fell 1.6% to 4,330, and the blue chip Dow Jones Industrial Average gave back 1.1% to 34,070.

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.