Financeupdated 51m ago3 min read
U.S. Stocks Close Lower as Treasury Yields Hit Highest Since 2002
Dow fell 0.66% to about 51,179 points. Treasury yields rose to multi-year highs, highest since 2002.
Yields Pressure Stocks
U.S. stocks closed lower on Wednesday as benchmark Treasury yields touched multi-year highs, with the Dow Jones Industrial Average falling 341.41 points, or 0.66 percent, to 51,179.87.
“The Dow Jones Industrial Average fell 341.41 points, or 0.66 percent, to 51,179.87.”
The S&P 500 lost 17.16 points, or 0.22 percent, to 7,801.77, and the Nasdaq Composite shed 61.20 points, or 0.22 percent, to 27,538.69.
The 10-year Treasury yield reached a high of 5.368 percent, its highest since 2002, before settling near 5.29 percent, and the 30-year yield reached a fresh 24-year high before retreating to near 5.67 percent in late trading.
Oil prices settled lower, with West Texas Intermediate for November delivery dropping 1.16 U.S. dollars, or 1.3 percent, to 88.28 dollars per barrel, and Brent crude for December delivery losing 38 cents, or 0.38 percent, to settle at 100.2 dollars per barrel.
Caterpillar led the Dow lower, dropping 5.75 percent after the Federal Trade Commission and the U.S. Department of Agriculture announced a public inquiry into farm-equipment markets, while Deere also fell 3.8 percent.
Fed Minutes, Mortgage Rates
Federal Reserve minutes from the Sept. 15-16 meeting signaled that another interest rate increase would likely be appropriate before year-end, and the minutes showed most participants assessed that another rate increase would likely be appropriate by year-end.
The Fed unanimously raised its benchmark rate by 25 basis points to a range of 3.75%-4% at the September meeting, and officials emphasized that future decisions would depend on incoming information, the economic outlook and the balance of risks.
Mortgage data highlighted the impact of rising borrowing costs, with the average rate on 30-year fixed mortgages climbing to 7.49% in the week ending Oct. 2, its highest level since November 2023, from 7.30% a week earlier, according to the Mortgage Bankers Association.
Mortgage applications fell 4.2% from the previous week, and the association attributed the rise in mortgage rates to higher Treasury yields and widening mortgage spreads amid increased interest rate volatility.
The dollar strengthened against the euro, with the exchange rate falling 0.56% to 1.12, while gold declined 1.4% to $4,107.50 per ounce and West Texas Intermediate crude fell 0.54% to $88.96 per barrel.
Auction, Oil, and Debt
A $39 billion auction of 10-year Treasury notes helped yields ease from intraday highs, and the yield on the 10-year Treasury stood at 5.286% after reaching 5.365% earlier in the session, its highest level since April 2002. The pullback in yields followed the auction, and the article linked higher yields to increased borrowing costs that can put pressure on equity valuations. The same session also tied market pressure to housing data and to the Fed’s view that financial conditions remained supportive of growth despite higher longer-term Treasury yields.
The AP Business report described the 10-year Treasury yield climbing as high as 5.36% in the morning, up from 5.27% late Tuesday and near its highest level since 2002, before the 10-year yield eased back to 5.28% later in the day. The AP report also connected the bond-market swings to oil prices, noting that Brent crude eventually settled at $100.20, down 0.4%, and that the pressure on stocks reflected yields swinging in the bond market.