US stocks trade lower as Treasury yields surge

New York, Oct 5 US stocks traded on a downbeat note on Thursday as the government bond rates hit new multiyear highs, dampening investor sentiment.

The Dow Jones Industrial Average slid 280.82 points, or 1.05 per cent, to 26,547.57. The S&P 500 was down 28.01 points, or 0.96 per cent, to 2,897.50, Xinhua news agency reported. 

The Nasdaq Composite Index fell 136.59 points, or 1.70 per cent, to 7,888.50.

The US benchmark 10-year Treasury note yield reached its highest level since 2011 on Thursday. It broke above 3.2 per cent before trading round 3.198 per cent. 

Meanwhile, the 30-year Treasury bond yield broke a new high since 2014. 

A higher yield can damp enthusiasm for stocks, as it offers higher returns for income-seeking investors, without the risk or volatility that can come with equities, analysts said.

The bond rates surge started on Wednesday, boosted by the better-than-expected economic data.

US private sector employment increased by 230,000 jobs from August to September, well above the market expectations of 185,000 according to research institute ADP's National Employment Report on Wednesday.

Thursday's jobless claims filing also provided a new boost in the bond market.

In the week ending September 29, US initial jobless claims registered 207,000, a decrease of 8,000 from the previous week's revised level, the Department of Labor reported on Thursday.