What Happened?
A number of stocks fell in the afternoon session after the May jobs report drove Treasury yields to levels that directly challenge the sector's business model.
The 10-year yield rose above 4.5% and the 30-year climbed above 5%, thresholds that increase mark-to-market pressure on bond portfolios at asset managers and raise the hurdle rate for new private credit and infrastructure fund deployment.
For firms like Blackstone, KKR, and Ares, a 30-year above 5% complicates the economics of long-duration deals, reduces the relative appeal of illiquid alternatives versus risk-free income, and slows deployment pipelines. CME FedWatch's shift toward pricing rate hike risk by year end also challenged the recovery in M&A and IPO activity that had been supporting advisory and underwriting fee revenue. The SpaceX IPO, at a $1.77 trillion valuation, was a bright spot, but one transaction cannot offset sector-wide rate repricing.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Diversified Financial Services company Paymentus (NYSE: PAY) fell 2.3%. Is now the time to buy Paymentus? Access our full analysis report here, it’s free.
- Asset Management company Ares (NYSE: ARES) fell 3.9%. Is now the time to buy Ares? Access our full analysis report here, it’s free.
- Asset Management company Blackstone (NYSE: BX) fell 2.9%. Is now the time to buy Blackstone? Access our full analysis report here, it’s free.
Zooming In On Ares (ARES)
Ares’s shares are very volatile and have had 20 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 21 hours ago when the stock gained 5.6% on the news that investors rotated out of AI and chip stocks and into financial names that had lagged during the technology bull run.
Blackstone surged 8%, shaking off news that it had begun limiting withdrawals from its Private Credit fund, as investors looked through the headline to the firm's durable fee-income base. Ares Management and KKR each gained 6% in sympathy. The move reflects a broader re-rating of alternative asset managers.
Firms like Blackstone, KKR, and Ares generate management and performance fees that are largely insulated from rate direction and tied instead to deployment activity, asset values, and institutional capital flows — all of which remain healthy. With capital markets active, IPO pipelines rebuilding, and M&A picking up, diversified financial names offer a different quality of earnings growth from the valuations embedded in technology stocks.
Ares is down 24.7% since the beginning of the year, and at $125.21 per share, it is trading 35% below its 52-week high of $192.76 from August 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Ares’s shares 5 years ago would now be looking at an investment worth $2,173.
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