Stocks close lower as the 10-year yield hits 5.11%: S&P 500 falls 0.75%, Nasdaq drops 1.1%
Hot flash PMI readings and a Fed governor backing more hikes sent Treasury yields to their highest since 2007. Rate-sensitive stocks and small caps took the worst of it; energy was the only sector up.
Stocks fell on Wednesday as a sharp jump in Treasury yields pulled every major index lower. The S&P 500 lost 0.75% to 7,706.03, the Nasdaq Composite fell 1.13% to 26,936.04, a day after its record close, and the Dow Jones Industrial Average dropped 352.10 points, or 0.68%, to 51,511.59, according to CNBC. Yahoo Finance closing data matches and shows the Russell 2000 down 1.77% at 2,838.66.
| Index | Close | Change |
|---|---|---|
| S&P 500 | 7,706.03 | -58.61 (-0.75%) |
| Nasdaq Composite | 26,936.04 | -308.24 (-1.13%) |
| Dow Jones Industrial Average | 51,511.59 | -352.10 (-0.68%) |
| Russell 2000 | 2,838.66 | -51.26 (-1.77%) |
The driver was the bond market
S&P Global's flash September PMIs came in hot, with the composite at 58.4 against 56 in August, and Fed Governor Michael Barr said "further policy adjustments are likely to be needed" to bring inflation down. More on his remarks: Barr backs more hikes. CNBC cited CME FedWatch odds of an October quarter-point hike above 66%, up from 55.4% a day earlier.
The Treasury's official closing figures show how hard the short end moved. The 2-year yield rose 14 basis points to 4.85% and the 10-year rose 15 basis points to 5.11%, the highest since 2007 (Treasury data). The 5-year closed at 4.99% after a weak auction. Chart: 10-year T-note.
Who felt it
The losses lined up with rate sensitivity. By SPDR sector fund closes, utilities fell 1.92%, real estate 1.55% and consumer discretionary 1.50%. Energy rose 0.96%, the only sector up. Small caps fell more than twice as much as the S&P 500.
For borrowers the move is already in prices. The Mortgage Bankers Association's average 30-year rate rose to 7.12% from 6.97%, CNBC reported. On a $400,000 loan that is about $40 a month more in principal and interest ($2,694 against $2,653).
McDonald's fell 4.8% after its growth plan came with a warning that flat traffic will persist. Alibaba dropped 4.7%, while IonQ gained 4.4% and Cracker Barrel 4.5%.
Oil, gold and crypto
Brent rose about 3.9% to $103.08 a barrel and U.S. crude futures settled up 1.8% at $92.16, CNBC reported, as Washington weighs a diesel export ban (background). Gold fell below $4,300 as the dollar firmed. Bitcoin was near $84,321 on Coinbase after the close, down 2.3% over 24 hours, and Ether was near $2,672, down 2.9%. See today's crypto report.
Weekly jobless claims come Thursday, with a forecast of 201,000. See the calendar and the markets board.
Sources: CNBC, Yahoo Finance, U.S. Treasury, Coinbase Exchange. Sector changes are based on SPDR sector ETF closes. Mortgage payment math is ours, on a 30-year fixed loan. This is market information, not investment advice.
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