U.S. equities closed lower on Thursday as investors parsed through a fresh batch of corporate earnings results and economic data, while sovereign bonds around the world fell.
"There's a lot of activity taking place, but the middle of the rope is not moving" in the stock market, said Mike Bailey, director of research at FBB Capital Partners. "Bond investors that were worried the UK and Europe were going off a cliff got a bit more relaxed."
The Dow Jones industrial average gyrated between gains and losses before closing about 30 points lower, with IBM contributing the most gains, offsetting losses in Boeing. The S&P 500 also held near the flatline for a large part of the session, before closing 0.3 percent lower, with telecoms advancing 1.6 percent to lead advancers and real estate falling 2.4 percent to lead decliners. The Nasdaq composite lagged, dropping 0.65 percent.
"I think you're seeing a tug of war between earnings ... and rising yields. I think the rise in yields is a bit of a correction," said Jim Davis, regional investment manager for The Private Client Group of U.S. Bank.
U.S. Treasury yields rose broadly, with the two-year note yield trading around 0.88 percent and the benchmark 10-year yield around 1.84 percent, following other sovereign bond yields. Yields in other countries, such as Brazil, Italy and India also spiked.
"Since the end of June, there has been a very high correlation between the Japanese yen and the U.S. 10-year note," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, adding that as the yen falls, so does the benchmark U.S. note. "This relationship is a trading relationship, so it's not long-term, but it's most evident at the long end of the curve."
"I do have a feeling that something has changed here today, and that this 1.83 level on 10s may be more sustainable than last week," LeBas said.