The Bond Market’s Impact on Stocks

At the WSJ, Ben Eisen highlights the impact of higher bond yields.

Rising bond yields are starting to compete with stocks that pay some of the biggest dividends, leaving these companies behind even as the stock market has rallied to new highs.

The S&P utilities sector is down about 10% since the end of November and the real-estate sector has fallen 4.9%, sharply underperforming the S&P 500’s 6.6% rise. Companies in both groupings typically pay out big dividends relative to their stock prices, giving them high dividend yields.

For years, investors poured money into high-dividend stocks as they sought investment income that outpaced superlow yields in the bond market, which were held down by the Federal Reserve’s low-rate policy. But the central bank is reversing course, leading to a rise in bond yields that has accelerated in recent days.

Posted by on January 31st, 2018 at 10:04 am


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