Dow Falls 341 Points as Treasury Yields Hit Multi-Decade Highs
Federal Reserve minutes showed most officials considered another rate increase appropriate by year-end, while U.S. Treasury yields climbed to levels not seen in more than two decades. U.S. stocks fell Wednesday, with the Dow down 341.41 points. The 10-year yield reached 5.365%, its highest level since April 2002, before easing after a Treasury auction.
U.S. stocks fell Wednesday as Treasury yields climbed, and fed minutes showed most Federal Reserve officials saw another interest-rate increase as likely appropriate by year-end. The minutes offer investors a clearer view of policymakers’ stance as borrowing costs rise across markets.
The Dow Jones Industrial Average lost 341.41 points, or 0.66%, to close at 51,179.87. The S&P 500 fell 0.22% to 7,801.77, while the Nasdaq Composite slipped 0.22% to 27,538.69.
The bond market set the day’s tone.
The 10-year Treasury note yield reached 5.365%, its highest level since April 2002. The 30-year bond yield also climbed to 5.732%, its highest since May 2002.
The minutes from the Federal Reserve’s September meeting said most participants considered another increase in the federal funds rate target range likely appropriate by year-end. They did not specify when a further move might happen.
“Participants emphasized, however, that they approached each meeting with an open mind and decisions at future meetings would depend on incoming information and its implications for the outlook and the balance of risks,” the minutes said.
Fed minutes shape rate expectations
The minutes point to officials’ willingness to raise rates again, while leaving future decisions dependent on incoming information. That distinction matters to investors assessing how long borrowing costs could remain elevated and how companies may absorb them.
Bank shares declined as investors weighed whether higher rates could restrain lending activity. Goldman Sachs and Bank of America each fell 1%. Wells Fargo, Citigroup and JPMorgan also ended lower.
Technology stocks faced pressure over concerns that more expensive borrowing could limit investment in artificial intelligence. CrowdStrike fell almost 5%, while Palo Alto Networks and Meta Platforms lost more than 3% and 2%, respectively.
Mike Dickson, head of research and quantitative strategies at Horizon Investments, said that the margin for error on earnings had narrowed as rates rose. He also said earnings could “still carry the market higher.”
Yields eased from their session high after the Treasury sold $39 billion in 10-year notes. Bill Merz, head of capital markets research at U.S. Bank Asset Management, said the auction’s bid-to-cover ratio and indirect bidder participation were “quite strong.”
“It was a solid auction,” Merz said, while cautioning that investors should consider other market drivers as well.
Oil prices also fell. U.S. crude settled down 1.3% at $88.28 per barrel, while Brent ended at $100.20 a barrel, down 0.4%.
The 10-year Treasury yield reached 5.365% on Wednesday.
