The stock market’s summer rally is in the rear-view mirror now. Worries about rising bond yields and a strengthening dollar are dragging down stocks. Meanwhile, investors are keeping watch on a possible government shutdown.
The yield on the 10-year U.S. Treasury note has been choppy. It settled Monday at a 16-year high above 4.5%, and it’s still above that level. Rising yields have hurt stocks recently in part by stoking concerns that they could slow down the economy by increasing borrowing costs for businesses and consumers. A stronger dollar can also hurt companies that rely on revenue from outside of the country.
“Dollar up, rates up— that’s really all that matters right now,” said Michael Antonelli, market strategist at Baird.
Moody’s Investors Service warned Monday that a government shutdown, which could come within a matter of days, could hurt the U.S.’s credit rating.
U.S. stocks fell, with declines across sectors. All three major indexes were down more than 1%, with the blue-chip Dow shedding about 400 points.
Amazon slid more than 3% after the Federal Trade Commission filed a lawsuit alleging that the online retail giant wields monopoly power.
The 10-year Treasury yield was hovering around 4.55%, a touch higher than Monday. The WSJ Dollar Index edged up, extending recent gains that have brought it to its highest level since last November.
Oil prices turned higher following recent declines, as investors remain nervous that runup in energy prices would add to inflation and make the Fed’s job harder. U.S. crude was above $90 a barrel.
Asian markets fell on concerns about China’s property sector. European indexes also slipped, with the Stoxx Europe 600 falling for a fourth straight session.
Up ahead: Costco is set to report earnings after the market close. An updated second-quarter GDP reading is out Thursday, followed by consumer-spending data and the Fed’s preferred inflation gauge on Friday.
— By Will Horner and Sam Goldfarb
