Major stock indexes declined, with the S&P 500 falling 0.8% to 7,683.69 and the Nasdaq Composite dropping 0.9% to 26,820.38. The Dow Jones Industrial Average also fell 0.7%. This downturn was largely attributed to rising oil prices and surging Treasury yields, which are fueling inflation concerns and strengthening expectations for more aggressive monetary policy from the Federal Reserve.
Treasury yields reached multi-year highs, with the 30-year bond yield climbing to 5.5704%, its highest since 2004, and the 10-year yield touching 5.251%, a 19-year high. Two-year Treasury yields saw their largest monthly rise since February 2023, increasing over 50 basis points in anticipation of further Fed rate hikes. Markets are now pricing in a roughly 70% probability of another rate hike in October.
Oil prices increased as hopes for a peace agreement in the Middle East diminished. U.S. crude settled at $92.60 a barrel, up $0.19, while Brent crude gained $0.96 to settle at $105.28. Brent futures had risen as much as 3% to $107.16 earlier. The rising energy costs are contributing to inflation concerns, impacting market sentiment, and influencing the Federal Reserve's policy outlook.
Despite the broader market decline, Nvidia's shares rose 1.7% after the chipmaker announced a record $150 billion share buyback authorization. However, other individual stocks faced pressure; Boeing shares tumbled 6.9% due to certification delays, and Tesla shares slumped 3.9% after a price target reduction from J.P.Morgan.
