| |
Financial Markets 09/01 15:29
Stocks closed broadly lower Tuesday as another round of U.S. military
strikes on Iran sent oil prices higher, stoking worries about stubbornly high
inflation. A bond market sell-off deepened, putting more pressure on stocks.
The S&P 500 index fell 0.7%. The Dow Jones Industrial Average dropped 0.8%,
and the Nasdaq composite slid 1%. The major indexes have lost ground three days
in a row.
The weak start to September follows a shaky but mostly positive month for
Wall Street. Every major index notched monthly gains in August. The same
worries continue to hang over Wall Street, though, including anxiety over
rising prices, government debt, and the impact of global conflicts on the U.S.
and the global economy.
Technology stocks were among the heaviest weights on the market. Nvidia fell
1.5%, Amazon dropped 1.9% and Advanced Micro Devices gave up 2.4%. Their big
market values tend to give them more influence over the broader market's
direction and their growth amid the artificial-intelligence boom has been
heavily reliant on borrowing, which becomes more expensive as interest rates
rise.
Much of the continued pressure being felt by Wall Street is coming from an
ongoing sell-off in U.S. government bonds. The yield on the 10-year Treasury,
which tends to impact mortgage rates, rose to 4.79% from 4.75% late Monday. It
was as low as 4.20% at the beginning of 2026.
The yield on the 2-year Treasury, which closely tracks expectations for
Federal Reserve moves on interest rates, rose to 4.39% from 4.34% late Monday.
That's up significantly from about 3.50% at the beginning of 2026.
Bond yields, which have an inverse relationship to prices, rise as bond
prices fall. Rising yields signal that investors are demanding a higher return
from Treasurys because they are becoming riskier. Growing government debt is
highlighting that risk.
The U.S. debt surpassed $40 trillion two weeks ago, a shocking milestone as
defense costs and interest on the burgeoning deficit make up an enormous share
of federal spending. The bond sell-off is global, with other nations facing the
same economic pressures.
Higher yields on bonds signal higher borrowing costs on mortgages and a wide
range of other loans. Higher borrowing costs tend to weigh down investments,
including stocks, while making it more difficult for businesses to expand.
Oil prices have been behind much of the pressure on inflation, bond yields
and the broader stock market. The price of Brent crude, the international
standard, rose 4.6% to settle at $94.65. U.S. oil climbed 5.2% to settle at
$90.22 per barrel -- the first time it closed above $90 in more than a month.
Energy costs remain high and volatile amid the ongoing U.S. war with Iran,
which has essentially shut down the Strait of Hormuz, through which 20% of the
world's oil is typically shipped.
Higher oil prices have pushed up costs for everything from gasoline to
shipped goods, fueling inflation that has been squeezing households and
businesses.
Higher inflation has also been a problem for the Federal Reserve. The rate
of inflation is well above 3%, and Wall Street expects the Fed to raise
interest rates before the year is over in order to try to bring inflation down
to its 2% target. Investors are betting on a 66% chance that the central bank
will raise its benchmark interest rate at its upcoming September meeting,
according to CME FedWatch.
The Fed will get more updates on inflation ahead of the meeting. Meanwhile,
it is getting updates on the jobs market this week. On Tuesday, the government
reported that U.S. job openings rose slightly in July. A broader monthly report
for August will be released on Friday.
All told, the S&P 500 fell 54.67 points to 7,631.47. The Dow dropped 419.02
points to 52,766.88, and the Nasdaq fell 271.11 points to close at 26,099.77.
Markets in Europe fell and markets in Asia ended mixed.
___
AP Business Writers, Elaine Kurtenbach, Michelle Chapman and Matt Ott
contributed to this report.
---------
itemid:775d7cf741349c7c8e689c0beb57f074
|
|
