Stocks were off to a lower start Monday as major U.S. benchmarks begin the final week of September on track for a losing month, with investors fretting over rising bond yields and indications the Federal Reserve plans to hold interest rates at high levels for an extended stretch.
What’s happening
-
The Dow Jones Industrial Average
DJIA
fell 123 points, or 0.4%, to 33,840. -
The S&P 500
SPX
was off 5 points, or 0.1%, at 4,315. -
The Nasdaq Composite
COMP
edged dwon 15 points, or 0.1%, to 13,197.
Last week, the S&P 500 fell 2.9%, its biggest weekly decline since the period ending March 10, as it finished at its lowest since June 9. The Dow finished Friday at its lowest level since July 10, while the Nasdaq saw its lowest close since June 7.
What’s driving markets
A rapid climb in long-term interest rates continued to set the tone across markets. Rising yields can weigh on stocks, particularly when they move rapidly. Higher yields decrease the present value of future earnings, weighing on stock-market valuations.
The yield on the 10-year Treasury
BX:TMUBMUSD10Y
rose more than 9 basis points to top 4.52%, on track for its highest close since 2007. Also stoking concerns about the outlook, oil prices have risen sharply since summer, with Brent crude
BRN00,
the global benchmark, and West Texas Intermediate crude
CL00,
the U.S. benchmark, both above $90 a barrel.
“Markets have struggled in recent weeks amid concerns over rising oil prices and bond yields, subdued economic activity across the global manufacturing sector and still-high inflation in major developed economies,” said Fawad Razaqzada, market analyst at Forex.com and City Index, in a note. “As a result, investors have lost appetite for taking on too much risk.”
Rather than rush in to buy the dip when stock prices decline, traders “have been happy to sit on the offer and slam asset prices back down each time we see a bit a of relief rally,” he wrote.
On the labor front, union leaders and Hollywood studios reached a tentative deal Sunday to end a historic screenwriters strike after nearly five months. No deal appeared in the works, however, for striking actors.
Separately, President Joe Biden is expected to travel to Michigan this week to join United Auto Workers union members on the picket line in their strike against the Big Three automakers — Ford Motor Co.
F,
General Motors Co.
GM,
and Chrysler owner Stellantis NV
STLA,
UAW strike: Labor leaders stand with striking workers
The housing crisis in China was back in the news, with Evergrande
3333,
shares slumping as the company scrapped a $35 billion debt-restructuring plan, while shares of China Aoyuan Group dropped Monday in their first day of trading in more than a year. The Hang Seng
HK:HSI
skidded 1.8% in Hong Kong trading.
Companies in focus
-
The tentative end of the Hollywood writers strike was unable to lift media companies like Warner Brothers Discover Inc.
WBD,
-3.06% ,
Paramount Global
PARA,
-1.86%
and Walt Disney Co.
DIS,
-0.58% .
Shares of all three were lower, failing to follow through on premarket gains. Netflix Inc. shares
NFLX,
+1.20% ,
however, were higher. -
Amazon.com Inc.
AMZN,
+1.89%
said Monday it would invest up to $4 billion in AI startup Anthropic and take a minority stake in the company in a move aimed at accelerating the development of its future foundation models and making them accessible to customers of its cloud business, AWS. Amazon shares rose 1.3%.
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