Stocks slip from record highs as long-term Treasury yields climb
Wall Street closed modestly lower Wednesday, a day after the S&P 500 and Nasdaq set record closes, as rising long-term bond yields revived worries about inflation and debt. The Dow fell 0.66%, and small-company stocks dropped more than 1%.
The numbers: The S&P 500 fell 17.16 points, or 0.22%, to 7,801.77. The Nasdaq Composite slipped 0.22% to 27,538.69, and the Dow Jones Industrial Average lost 341.41 points, or 0.66%, to 51,179.87. The small-company Russell 2000 fell 1.31% to 2,793.20, according to closing data compiled by Dean Financials and Investing.com. Decliners outnumbered gainers on the New York Stock Exchange by about 3.5 to 1.
Why: Long-dated Treasury yields resumed their climb, Reuters reported. In recent sessions Brent crude briefly topped $100 a barrel and the 30-year Treasury yield touched a 24-year high, as supply worries tied to the Iran war fed inflation fears. Higher yields mean higher borrowing costs: Reuters noted the 30-year fixed mortgage rate hit a near three-year high last week, and housing and homebuilder stocks fell 2.3% and 2.9%.
The Fed: Minutes from the Federal Reserve’s September meeting, where it raised interest rates for the first time since July 2023, showed officials divided on why the hike was needed, Reuters reported. Traders priced in less than a 20% chance of another hike at the October meeting, per CME’s FedWatch tool. Stocks pared losses after oil prices turned lower when the International Energy Agency agreed to speed the release of oil stocks, prioritizing diesel.
Movers: Caterpillar fell more than 5%. Chip stocks ended lower, and SpaceX shares retreated after media reports that the company was seeking $40 billion in financing to buy Nvidia chips, Reuters said. NRG Energy, Moderna and Micron were among the S&P 500’s top gainers, Investing.com reported.
What’s next: Third-quarter earnings season starts in earnest next week with big financial firms. Analysts expect S&P 500 earnings to grow 30.6% from a year earlier, according to LSEG data cited by Reuters. This is market news, not investment advice.