On Tuesday, the stock markets had a tough day. This happened because a lot of people were paying attention to something called “Treasury yields,” which are like the interest rates on government loans. These yields reached their highest levels in 16 years, which intensely worried investors.
The Dow Jones Industrial Average, which shows how well big companies are doing dropped by 400 points, which is a 1.2% decrease. At the same time, the S&P 500 which tracks a broader range of companies, went down by 1.3%, and the Nasdaq Composite, which includes many tech companies, fell by 1.7%.
The prices of stocks hit their lowest points of the day as Treasury yields kept going up. This happened because of a report about job openings in August. It showed that there were a lot of open jobs, more than experts had expected. This made people worry that the job market is too tight.
On that Tuesday, some companies like Veralto and spice maker McCormick & Company had hugelosses. Their stock prices fell by more than 9%. Carnival – a cruise company, also had a tough day with a 6.3% drop. Airbnb and Viatris both saw their stock prices go down by over 5%.
The 10-year Treasury yield reached 4.756%, which is the highest it’s been since August 15, 2007. The 30-year Treasury yield also went up to 4.891%, the highest since October 17, 2007.
Investors are worried that these higher interest rates might stick around for a while. They fear this could lead to a recession, which is a period when the economy isn’t doing well. These Treasury yields are now at levels we haven’t seen in more than 10 years.
Some experts, like Alex McGrath from NorthEnd Private Wealth, say that if these higher yields keep going up, it will make it harder for the stock market to do well this year.
But Joseph Cusick from Calamos Investments says that higher interest rates aren’t always bad for the stock market. It depends on whether they come with a strong economy that helps companies make more money. However, higher rates can be a problem when people see them as a safe place to put their money when things are uncertain. After a mixed day on Wall Street, influenced by a deal to prevent a government shutdown, investors are looking to move past a disappointing September. In that month, all three major stock indexes, including the S&P 500, went down by almost 5%.
This shows that investors are paying close attention to important economic reports like the payroll report coming out on Friday. They’re also keeping an eye on companies’ earnings reports, which start next week. These reports will be closely watched by investors.