Shares of banks and other financial institutions saw an uptick as Treasury yields took a step back. The recent rise in yields had raised concerns over loan demand and the potential impact of tighter credit on economic growth.
The market closely watched the rebound in the Russell 2000 index, which primarily consists of small-cap stocks. This index is highly sensitive to the outlook for Treasury yields and economic growth. Quincy Krosby, the chief global strategist at brokerage LPL Financial, highlighted the significance of small-cap stocks. She noted that many of them carry heavy debt, making them particularly attentive to interest rate fluctuations. Furthermore, Krosby stated that small caps also serve as a meaningful indicator of the broader economic landscape.
Krosby suggested that if the rebound in small-cap stocks continues, it could imply that investors in this segment are betting against an impending recession.
Meanwhile, a cybersecurity incident affected the U.S. unit of China's largest bank, the Industrial and Commercial Bank of China. This incident led to a temporary disruption in some trades within the Treasury bond market, as workers were forced to use USB thumb-drives for trading activities.