The U.S. stock market closed lower on Thursday as the selling pressure intensified in the late-day trade. This decline was primarily due to government bond yields reaching their highest level in approximately 16 years.
- The Dow Jones Industrial Average (DJIA) recorded a loss of about 291 points, or 0.8%, closing near 34,473.
- The S&P 500 index closed 0.8% lower.
- The Nasdaq Composite Index fell 1.2%.
According to preliminary FactSet Data, equities across the board experienced losses, except for the energy sector of the S&P 500, which gained 1.1%.
Impact of Bond Yields
The market was significantly influenced by bond yields. The 10-year Treasury rate climbed to 4.307%, marking the highest yield for the benchmark rate since November 2007, as reported by Dow Jones Market Data.
Higher long-term Treasury rates result in increased borrowing costs for households, the government, and corporations. This rise in costs can have adverse effects on earnings, economic growth, and the overall stock market.
Federal Reserve’s Outlook
The minutes of the July policy meeting released by the Federal Reserve indicated that central banks continue to express concerns regarding inflation containment. This concern has the potential to lead to additional rate increases.