S&P 500 and Nasdaq Hit Six-Week Lows as Yields and Oil Prices Climb
Equities faced a selloff on Monday as rising Treasury yields and crude oil prices pressured the S&P 500 and Nasdaq to their lowest closing levels in over a month.
The S&P 500 fell 0.43% to close at 7,586.84 on Monday, marking its lowest level in six weeks. The Nasdaq also declined, continuing a trend that has wiped out much of the gains seen over the summer.
The market downturn follows four consecutive days of losses that occurred through September 10. These daily declines, ranging between 0.5% and 0.7%, pushed major indexes below their early August support levels.
Macroeconomic pressure is mounting as Brent crude surged past $109 per barrel, a 3% gain for the session. West Texas Intermediate also rose above $105, driven by supply concerns linked to geopolitical tensions in the Middle East involving Iran and Saudi production disruptions.
Meanwhile, the 10-year Treasury yield climbed into the 4.99% to 5.04% range, a level not seen since 2007. As risk-free government debt yields approach 5%, the appeal of holding volatile equities has diminished.
The shift in market sentiment was triggered by producer inflation data that came in higher than expected. This report forced traders to adjust their outlook on Federal Reserve policy, with rate cuts appearing less likely and the possibility of rate hikes returning to probability models.
Technology stocks, which previously benefited from earnings and AI interest, are now experiencing the most significant selling pressure. Rising borrowing costs are compressing valuations for companies that rely on cheap capital to fund growth.
Smaller growth companies are also facing challenges, as higher risk-free rates increase the cost of financing and make it more difficult to justify unprofitable quarters to investors.
