Wall Street closes lower as US Treasury yields hit highest level since 2002

The three main US stock indexes closed lower on October 7, US time, as Treasury yields rose to their highest level in more than two decades. The Dow Jones Industrial Average fell 341.41 points, or 0.66%, to 51,179.87. The S&P 500 fell 17.16 points, or 0.22%, to 7,801.77, and the Nasdaq Composite fell 61.20 points, or 0.22%, to 27,538.69. Yonhap and Chosun Ilbo reported that the S&P 500 and Nasdaq eased from record highs set the previous day. [ 2 , 4 , 5 , 6 , 8 ]

Newsis reported that the 10-year Treasury yield rose as high as 5.365% during the session, the highest since April 2002, and that the 30-year yield reached 5.732%, the highest since May 2002. Korea Economic Daily attributed the rise to inflation concerns linked to higher oil prices and expectations of increased US government spending. Yields came off their highs after a $39 billion 10-year auction held by the US Treasury drew solid demand, and stocks recovered part of their losses. Korea Economic Daily reported that the 10-year yield eased to around 5.28% and that the auction's yield of 5.3% was the highest since 2000. Bill Merz, head of capital markets research at U.S. Bank Asset Management, told Newsis it was a "solid auction" with strong bid-to-cover and indirect participation. [ 3 , 5 , 7 , 8 ]

Minutes of the Federal Reserve's September FOMC meeting, released the same day, also weighed on stocks, Newsis reported. According to the minutes, most participants judged that one more increase in the federal funds rate target range by the end of the year would be appropriate, but did not specify timing and said future decisions would depend on incoming data, the outlook and the balance of risks. [ 5 , 8 ]

Newsis reported that bank stocks fell on concern that higher rates could curb lending: Goldman Sachs lost 1.11% and Bank of America 1.05%, and Wells Fargo, Citigroup and JPMorgan also closed lower. Tech stocks fell on concern that higher borrowing costs could weigh on AI infrastructure investment, with CrowdStrike down 4.81%, Palo Alto Networks down more than 3% and Meta down more than 2%. Seoul Shinmun, in an article it said was written with MetaVX's generative AI, reported that the Philadelphia Semiconductor Index fell 1.15% to 13,066.15, Caterpillar fell 5.75% and Micron rose 4.06%. Mike Dickson, head of research at Horizon Investments, told Newsis that the "margin for error" for earnings had narrowed, though earnings could still lift stocks further. [ 4 , 5 , 8 ]

Falling oil prices limited the losses. WTI crude fell 1.3% to $88.28 a barrel and Brent fell to $100.20, after the International Energy Agency agreed to speed up a previously announced release of stockpiled oil. Newsis said the IEA was responding to global supply disruptions and fuel price increases caused by the Iran war. [ 5 , 7 , 8 ]