Higher bond yields send US stocks sliding

Rising bond yields triggered a sell-off on Wall Street today as persistent nervousness about the economy and interest rates motivated investors to take profits.

Government bonds tumbled for a fourth straight session, sending market interest rates higher and contributing to the broader decline in stocks.

The yield – which moves in an opposite direction from price – on the 10-year Treasury note leaped to a 20-month high of 4.74% from 4.69 percent late on Friday.

“It seems like the market is obsessing on this bond market fallout, which was somewhat precipitated by the move to raise (interest rates) in Japan,” said Jack Ablin, chief investment offier at Harris Private Bank.

“A lot of the fuel that has been used to invest in this bond market has been derived from ’easy money’ in Japan.”

With Japan’s economy improving, analysts believe the country’s central bank is likely to raise rates soon; the bank’s policymakers meet Wednesday and Thursday. US investors fear that rising interest rates in other countries could contribute to more rate increases in the US.

With little other economic data to quell anxiety about the economy’s health and price inflation, investors felt safer pulling out of the market despite a sharp drop in oil prices and acquisition news at AT&T Corp. and General Motors Corp.

The Dow Jones industrial average fell 63.00, or 0.57 percent, to 10,958.59. The Dow slid as much as 92 points shortly after midday.

Broader stock indicators also lost ground. The Standard & Poor’s 500 index declined 8.97, or 0.7%, to 1,278.26, and the Nasdaq composite index dropped 16.57, or 0.72%, to 2,286.03.