Financial Markets                      10/07 09:37

   

   NEW YORK (AP) -- U.S. stocks are slipping Monday as pressure rises from the 
bond market after Treasury yields hit their highest levels since the summer.

   The S&P 500 was 0.3% lower in early trading, though it's still close to its 
all-time high set a week ago. The Dow Jones Industrial Average was down 140 
points, or 0.3%, coming off its own record. The Nasdaq composite was down 0.3%, 
as of 9:35 a.m. Eastern time.

   U.S. stocks have been largely rallying to records on relief that interest 
rates are finally heading back down, now that the Federal Reserve has widened 
its focus to include keeping the economy humming instead of just fighting high 
inflation. Friday's blowout report on U.S. jobs growth raised optimism about 
the economy and hopes that the Fed can pull off a perfect landing for it.

   But Friday's jobs report was so strong that it also forced traders to 
ratchet back forecasts for how much the Fed will ultimately cut interest rates 
by. That in turn has sent Treasury yields higher, and the 10-year yield is back 
above 4% for the first time since August.

   The two-year Treasury yield also briefly climbed back above 4%, up from just 
3.50% a couple weeks ago. That's a sizeable move for the bond market, and it 
can drag on prices for stocks and kinds of other investments.

   When Treasury bonds, which are seen as the safest possible investments, are 
paying more in interest, investors become less inclined to pay very high prices 
for stocks and other things that carry bigger risk of losing money.

   Companies in the housing industry can also feel more pressure from higher 
Treasury yields, which translate into higher mortgage rates. Builders 
FirstSource fell 2.7% for one of the largest losses in the S&P 500. Home Depot 
and home builders D.R. Horton, PulteGroup and Lennar at fell at least 1%.

   Elsewhere on Wall Street, winemaker Duckhorn Portfolio more than doubled 
after a private-equity firm said it would buy the company for roughly $1.95 
billion in cash.

   In the bond market, the yield on the 10-year Treasury rose to 4.01% from 
3.97% late Friday.

   The yield on the two-year Treasury, which more closely tracks expectations 
for the Fed, jumped more. It rose to 3.98% from 3.92%.

   Treasury yields may also be feeling some upward push from the recent jump in 
oil prices. They've been spurting higher on worries that worsening tensions in 
the Middle East could ultimately lead to disruptions in the flow of crude.

   Brent crude, the international standard, rose another 1.4% Monday to $79.18 
per barrel. Benchmark U.S. crude, meanwhile, gained 1.7% to $75.63 per barrel.

   In stock markets abroad, European indexes were moving modestly following 
bigger gains in Asia.

   Japan's Nikkei 225 index gained 1.8% after the value of the yen sank against 
the U.S. dollar. A weaker yen can boost profits for Japanese exporters.

   Nintendo gained 4.4% following reports that a Saudi wealth fund was planning 
to increase its investment in the Kyoto, Japan-based video game maker.

   Stock markets in mainland China will reopen on Tuesday from a weeklong 
holiday, and the government said it plans to explain details of plans for 
economic stimulus at a morning news conference in Beijing. Before the Oct. 1 
National Day holiday began, stocks in Shanghai and Shenzhen had soared 
following announcements of policies aimed at reviving China's struggling 
real-estate market.

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   AP Business Writer Elaine Kurtenbach contributed.

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