"If yields continue to hold at these levels... this will be a strong headwind for equity prices, as investors choose the relative safety of a near-guaranteed 5% return on funds in US Treasuries, compared with the uncertainty of stocks, many of which are trading at or near all-time highs," said David Morrison, senior market analyst at Trade Nation.
"The weakness was atypical as equities tend to do well in the last five trading days of December and into the first two days of January, a phenomenon dubbed the Santa Claus rally."
"The S&P 500 has gained 1.3% on average during the period since 1969, according to the Stock Trader's Almanac."
"However, some analysts expect President-elect Donald Trump's policies to be inflationary, with the yield on the benchmark 10-year note trading near its highest level since May 2024."
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