Bond Yields Reach a New Threshold
U.S. stocks fell as pressure from the bond market intensified and a strong economic report revived concerns about inflation. The S&P 500 lost 0.8%, the Dow Jones Industrial Average dropped 352 points, and the Nasdaq composite declined 1.1%.
The yield on the 10-year Treasury jumped to 5.10% from 4.96% and briefly approached 5.14%. That level was last seen in 2007, before the global financial crisis pushed yields sharply lower. Higher yields weaken investment prices and raise borrowing costs throughout the economy.
Inflation and Oil Renew the Pressure
A preliminary report showed U.S. business activity growing at its fastest pace in more than five years. The strength suggested that the economy could continue generating inflation. Business costs also rose at their quickest rate in four years, partly because oil became more expensive.
Brent crude for November delivery climbed 3.9% to $103.08 per barrel, ending its recent decline. December contracts rose 2.8% to $98.12. Both remained far above the roughly $72 price recorded before the war with Iran began.
Persistent inflation led the Federal Reserve to raise its short-term rate last week for the first time in three years. Fed Governor Michael Barr said more increases would probably be necessary. Traders placed better-than-even odds on hikes in both October and December.
Company Profits Fail to Lift the Market
Strong corporate earnings have supported stocks despite higher rates and oil prices, but individual results provided limited relief. KB Home exceeded profit expectations, yet its shares fell 3% after the company described tougher housing conditions.
The homebuilder said buyers had become more cautious as mortgage rates increased alongside Treasury yields. General Mills also surpassed profit forecasts. Its shares rose 1%, although the company warned that consumer conditions remained difficult and left its annual outlook unchanged.
At the close, the S&P 500 stood at 7,706.03, the Dow at 51,511.59, and the Nasdaq at 26,936.04. Markets also declined across much of Europe and Asia. Hong Kong fell 1%, while Shanghai lost 0.4% before Xi Jinping’s state visit to Washington.
References
Choe, S. (2026, September 23). Pressure from the bond market hits a new level, and US stocks slide on worries about inflation. AP News. https://apnews.com/article/stocks-markets-trump-iran-us-6a3b530d3c1df18029956016203ae52e