Chinanews client, Beijing, February 26 (Reporter Xie Yiguan) The surge in U.S. bond yields triggered a sell-off of risky assets. On February 25, local time, U.S. stocks suffered a severe setback. The Dow fell more than 500 points and the Nasdaq fell more than 3%. Large technology stocks fell collectively.

US stocks plummeted, global stock markets under pressure

  As of the close of the 25th, the Dow fell 559.85 points, or 1.75%, to 31402.01 points; the Nasdaq fell 478.54 points, or 3.52%, to 13119.43 points; the S&P 500 index fell 96.09 points, or 2.45%, to 3,823.34 points.

Dow Jones index chart.

  Major US technology stocks suffered heavy losses. Tesla fell 8.06%, Apple fell 3.48%, Amazon fell 3.24%, Google fell 3.26%, Facebook fell 3.64%, and Microsoft fell 2.37%.

  Large Chinese concept stocks also fell collectively. Alibaba fell 4.10%, Baidu fell 3.23%, NetEase fell 7.52%, Pinduoduo fell 4.61%, and Good Future fell 4.51%.

  Affected by US stocks, major European stock markets fell across the board. The German DAX index fell 0.69% to 13879.33 points; the French CAC40 index fell 0.24% to 5783.89 points; the British FTSE 100 index fell 0.11% to 6651.73 points.

  The sharp drop in US stocks also dragged down the Asia-Pacific stock market on the 26th. The Nikkei 225 index fell 1.37% at the opening quotation, and the South Korea KOSPI index fell 2.23% at the opening quotation.

U.S. Treasury yields soared, making stock investors panic

  In response to the U.S. stock market crash, Ryan Detrick, chief market strategist at investment company LPL Financial, said: “Everything today has to do with bond yields. The rise in 10-year Treasury yields has panicked the stock market.”

  On the 25th, the U.S. Department of Labor issued a report stating that 730,000 people applied for unemployment benefits for the first time in the United States last week, which was lower than market expectations.

On the same day, the US Department of Commerce released data showing that durable goods orders in January increased by 3.4% month-on-month, better than the expected increase of 1.1%. The data for December 2020 was revised up to an increase of 1.2%.

In addition, the US GDP data for the fourth quarter of 2020 has been revised up to 4.1%, which is better than the data first announced by the Ministry of Commerce last month.

  Strong economic data promoted the rise in US Treasury yields.

On the 25th, the US 10-year Treasury bond yield broke through 1.6% at one point and then fell back, but it is still at the highest level since February 2020.

One-day chart of U.S. 10-year Treasury bond yields.

From Yingwei Financial.

  "The S&P 500 dividend yield is currently about 1.43%, and the 10-year U.S. Treasury yield is higher than this level. This may stimulate investors to switch from stocks to bonds, which will particularly impact the stock prices of technology growth stocks. "US Consumer News and Business Channel (CNBC) reported.

As market risks increase, the US stock bubble will burst?

  Regarding the surge in U.S. Treasury yields, President of the Atlanta Federal Reserve Bank of the United States, Rafael Bostic, said that he is not worried about rising U.S. Treasury yields. From a historical perspective, the yields are still very low.

Another Fed official James Brad said that the rise in U.S. bond yields reflects the market's optimism that the economy will emerge from the crisis of the new crown epidemic.

  "The Wall Street Journal" quoted analysts as saying that although the soaring U.S. bond yields will cause the stock prices of some companies to fall, it does not pose a threat to the stock market, it only promotes the stock rotation.

On February 14, local time, people in New York, USA, lined up to take a photo with the Copper Bull on Wall Street.

Photo by China News Agency reporter Liao Pan

  But many institutions are concerned about the stock market.

According to Societe Generale analyst Albert Edwards, "It is certain that if bond yields continue to rise, and the stock market moves smoothly from growth and defensive stocks to value and cyclical stocks, the Fed will remain optimistic, but market risks It is increasing. The Fed has blown out so many bubbles, something will burst soon."

  Dalio, the founder of the world's largest hedge fund company Bridgewater, has previously warned that although the overall US stock market is still in a bubble, "emerging technology stocks" have now entered the "extreme bubble zone."

  "The rapid rise in the index yield represents that the overall stock market is facing huge risks, especially those sectors with the largest valuation growth, such as growth stocks and technology stocks." said Elia Lattuga, co-head of the strategic research department of Bank of Yuxin, Italy.