Wall Street suffered a sharp decline yesterday, with the Dow Jones Industrial Average having its worst day since September.
The Dow Jones Industrial Average finished the day down 0.96% at 42,514.95, down 409.94 points. The S&P 500 closed up 0.92% at 5,797.42. The Nasdaq Composite Index also fell 1.6% to 18,276.65.
Both the Dow and the S&P 500 lost their third consecutive session.
The decline in stock prices was driven by the 10-year Treasury yield rising above 4.25%, the fastest pace since July 26. The yield on Treasury loans has been rising throughout the month, even after the Fed began cutting interest rates in September. Some point to economic growth with rising incomes, while others point to the potential for a second Donald Trump presidency in the U.S. fiscal deficits.
“To me, it’s all about the distribution of higher interest rates. The market is repricing profits that the Fed could aggressively cut interest rates. There were parts of the economy that didn’t hold on to rising interest rates, but the longer rates stay high, the different parts of the economy have to reprice that reality, the economy is out of balance,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management.