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U.S. stocks on Wednesday resumed their bruising sell-off, and so did bonds, sending Treasury yields higher. WTI crude oil futures (CL1:COM) surged, adding to inflationary concerns.
The benchmark S&P 500 (SP500) in the previous session slumped to its lowest close since early June on higher for longer rate concerns.
All three major averages opened in the green, but gave up those gains quickly and moved decidedly lower through the day.
By late afternoon, the tech-heavy Nasdaq Composite (COMP.IND) was down 0.56% to 12,990.38 points. The S&P (SP500) was lower by 0.62% to 4,246.96 points, while the blue-chip Dow (DJI) slipped 0.75% to 33,367.76 points.
Of the 11 S&P sectors, nine had slipped into negative territory, led by Utilities and Consumer Discretionary.
Energy was the top gainer, as WTI crude oil futures (CL1:COM) jumped nearly 4% after data showed a larger than expected drop in U.S. crude supplies last week.
Treasury yields were subdued earlier in the session, but have since risen as a bond sell-off restarted. The longer-end 10-year yield (US10Y) was now up 7 basis points to 4.63%, while the more rate-sensitive 2-year yield (US2Y) was now up 2 basis points to 5.15%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
U.S. equities have seen a brutal sell-off in the last ten days, with the benchmark S&P 500 (SP500) having retreated 4% and hitting its most oversold level of the year.
“Through September 26, the S&P 500 (SP500) has fallen 6.9% from its July peak,” Jim Bianco, president of Bianco Research, wrote on X (formerly Twitter), while highlighting how most of the rally this year has been largely led by the so-called “Magnificent Seven” group of megacap technology stocks.
“Take out the ‘Magnificent Seven’ and the thousands of other listed U.S. stocks, as a group, are not having a good year. They are all underperforming cash. And remember, last year was historically bad. So, at the three-quarter point of this year, the rebound is not really a rebound unless your stock is one of seven mega-tech companies tied to (artificial intelligence),” Bianco said.
The S&P 500’s (SP500) recent decline has come as traders have come to grips with the Federal Reserve’s more hawkish than anticipated dot plot and clear signal of higher rates for longer. Another headache this week for investors has been the looming government shutdown.
Earlier in the day, the mood was somewhat more positive on hopes that the ongoing United Auto Workers (UAW) strike along with the prospect of a government shutdown could lead to the Fed easing up on its policy tightening. That sentiment was echoed by Minneapolis Fed President Neel Kashkari, who said that the central bank might not have to use its tools to ease inflation as the economy would slow if a shutdown happened or if the strike was extended.
Turning to Wednesday’s economic calendar, August durable goods orders unexpectedly ticked up, with the headline number gaining 0.2% compared to an expected decline of 0.5%. Core orders rose 0.4%, higher than the anticipated figure of +0.1%.
Meanwhile, State Street’s gauge of investor confidence rose slightly in September. Additionally, Atlanta Fed’s reading of business uncertainty continued to edge down in September.
Looking at active stock movers, NextEra Energy (NEE) was the top percentage loser on the S&P 500 (SP500), after its affiliate NextEra Energy Partners (NEP) slashed its long-term growth outlook.
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