16 hrs ago
Wall Street Falls as Treasury Yields Surge, Then Recover
U.S. stocks fell on Wednesday as investors worried that rising prices might lead to higher interest rates.
The Dow dropped 350 points, though it had fallen much further earlier in the day.
The S&P 500 and Nasdaq also fell, but by less.
Government bond yields rose sharply before easing after investors showed strong interest in a bond sale.
Federal Reserve meeting notes suggested another rate increase could happen before the year ends.
Levi Strauss reported mixed results and lowered its sales forecast.
Oil prices stayed steady despite a storm reducing production in the Gulf of Mexico.
The Dow Jones fell 350 points Wednesday after losing more than 600 points at its intraday low.
The S&P 500 and Nasdaq each declined 0.2%, retreating from record highs but outperforming the Dow.
The 10-year Treasury yield reached 5.35%, its highest level since 2002, before easing after strong demand at a $39 billion bond auction.
Federal Reserve meeting minutes said most participants considered another interest-rate increase likely by year-end, without specifying when.
Levi Strauss shares fell after the company lowered its annual sales forecast, despite raising its full-year earnings outlook.
- Who
- U.S. stock markets, investors, the U.S. Treasury and the Federal Reserve.
- What
- Major U.S. stock indexes fell as Treasury yields surged, then recovered from their intraday lows.
- Where
- Wall Street and U.S. Treasury markets.
- When
- Wednesday, October 7; the year is not specified in the article.
- Why
- Rising bond yields and concerns about inflation and interest rates weighed on stocks.
Factors Supporting a Market Recovery
Factors Weighing on Markets
Treasury yields and bond demand
Factors Supporting a Market Recovery
Strong demand at the 10-year note auction helped yields retreat from their session high and supported a recovery in stocks.
Factors Weighing on Markets
The 10-year yield climbed to 5.35%, raising concerns about inflation and the effect of higher interest rates on borrowing.
Federal Reserve policy
Factors Supporting a Market Recovery
The meeting minutes did not specify when another rate increase might occur.
Factors Weighing on Markets
Most meeting participants assessed that another increase in the federal funds rate would likely be appropriate by year-end.
Key facts
- Dow Jones close
- Down 350 points; it had been down more than 600 points at its intraday low.
- S&P 500 and Nasdaq
- Each ended down 0.2%.
- 10-year Treasury yield
- Reached 5.35%, its highest level since 2002, before easing.
- 10-year note auction
- The $39 billion auction drew what the article described as strong demand; the Treasury paid a 5.3% yield, its highest since 2000.
- Federal Reserve outlook
- Meeting minutes said most participants thought another rate increase would likely be appropriate by year-end.
- Levi Strauss
- Raised its full-year EPS outlook but cut its sales forecast to 7%, the lower end of its previous 7%–7.5% range.
- Oil production disruption
- A Gulf of Mexico storm shut output reported as more than 510,000 barrels per day, about a quarter of regional production.
Quotes
Federal Reserve meeting minutes
Minutes summarizing participants’ views at the latest Federal Reserve meeting
“With regard to the outlook for monetary policy beyond the current meeting, most participants assessed that another increase in the target range for the federal funds rate would likely be appropriate by year end.”
CNBC TV 18
Sources
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