Bond yields crank higher and pull US stocks further from their record - AP News

Rising bond yields have once again become the dominant force in US equity markets. As yields climbed, major stock indices slipped further from their recent record highs, reflecting a familiar dynamic: when the return on risk-free government debt increases, the relative appeal of equities can diminish, particularly for growth-oriented sectors whose valuations depend heavily on future earnings.

The move matters because bond yields serve as a benchmark for borrowing costs across the economy. Higher yields can pressure corporate margins, cool demand for rate-sensitive activities such as housing and capital investment, and prompt investors to reassess how much they are willing to pay for each dollar of earnings. That reassessment tends to hit long-duration stocks hardest.

What to watch from here is whether the yield rise reflects stronger growth expectations or persistent inflation concerns — the two carry very different implications for equities. Also worth monitoring is whether the move stabilizes or accelerates, since a rapid, disorderly climb in yields has historically been more disruptive to markets than a gradual one.