Stocks fall from records as yields hit 24-year high, Fed eyes hike
U.S. stocks closed lower Wednesday, a day after a record, as the 10-year Treasury yield touched its highest level since 2002. The Dow fell 341 points, or 0.7%, while the S&P 500 and the Nasdaq each slipped 0.2%. Fed minutes showed most officials expect another rate hike by year-end.
Wall Street's record run cooled on Wednesday as bond yields climbed.
The Dow Jones Industrial Average fell 341.41 points, or 0.7%, to 51,179.87, the Associated Press reported. The S&P 500 slipped 17.16 points, or 0.2%, to 7,801.77, a day after it closed at a record. The Nasdaq Composite lost 61.20 points, or 0.2%, to 27,538.69.
The drop was worse in the morning. Early in the session, the Dow was down close to 1%, Reuters reported. Stocks cut their losses after the Treasury sold $39 billion in 10-year notes in a strong auction, The Wall Street Journal said.
The big mover was the bond market. The yield on the 10-year Treasury note rose as high as about 5.37% during the day, its highest level since April 2002, Invezz reported. It eased after the sale. Yields rise when bond prices fall, and they help set the cost of many loans. The 10-year yield guides 30-year mortgage rates, so a higher yield can make buying a home cost more. Homebuilder stocks fell 2.9%, The Economic Times reported.
Oil added to the worry. Brent crude, the global benchmark, settled around $100 a barrel as traders weighed more Iranian attacks on ships in the Strait of Hormuz, Bloomberg said. Brent traded near $72 before the U.S.-Israel war with Iran began in February.
At 2 p.m. ET, the Federal Reserve released minutes from its September meeting. Most officials said another rate hike would likely make sense by the end of the year. The minutes gave no date. The Fed raised rates in September for the first time since 2023 to fight rising prices.
Traders now see less than a 20% chance of a hike at the Fed's Oct. 27-28 meeting, down from 37.6% a week ago, according to CME's FedWatch tool.
Chip stocks, which are up more than 80% this year, also ended lower. Next up: September consumer prices come out Oct. 14, and big banks begin reporting third-quarter results next week.
What we know: Stocks closed lower, and the 10-year yield touched its highest level since 2002.
What we don't: Whether the Fed raises rates again in October or waits until December.
Where outlets agree The AP and The Wall Street Journal both report that the Dow fell 341.41 points and the S&P 500 lost 17.16 points from its record on Wednesday.
Where they differ The Fed minutes leaned toward another hike this year, but traders cut their bets on an October move to under 20%, Invezz and The Economic Times reported.