Stock markets suffered losses on Tuesday as traders continued to watch for a rise in US (Treasury) bond yields, which hit a 16-year high.
The Dow Jones Industrial Average index fell by 159 points or 0.5%. The S&P 500 slid 0.5%, and the Nasdaq Composite fell 0.7%.
The 10-year bond yield traded at 4.735%, firming to its highest level since August 15, 2007. The yield has surged over the past month, with traders assessing the possibility of tighter Federal Reserve policy for a longer period.
Investors have recently expressed concern about the potential for the Federal Reserve to raise interest rates higher for a longer period of time which could result in the economy slipping into recession. This has pushed bond yields to levels not seen in more than a decade.
"Stocks are trying to recover but investors and traders are still worried and cautious" writes Adam Crisafulli from Vital Knowledge. "At this point, market players seem willing to give up the chance of a ~2-4% upside to ensure that the upside is based on stronger factors before taking the plunge."
Wall Street was trading mixed, after politicians in Washington reached a short-term deal over the weekend that delayed the government shutdown. The Dow Jones, a 30-stock index, closed 0.2% lower, while the S&P 500 closed slightly higher. The Nasdaq Composite rose for four consecutive days.
All three major indexes closed lower in September and also in the third quarter. The S&P 500 itself lost nearly 5% in September.
That means key economic reports like last month's jobs report, scheduled for this Friday, and the start of the earnings reporting season next week, are now back in the spotlight.
"Investors are hoping for good data to come, but we believe that these expectations are overly optimistic for the remainder of 2023 and 2024," said Richard Saperstein, chief investment officer at Treasury Partners.
In terms of economic data, investors will be watching the JOLTS Job Openings data, which is scheduled to be released today Economists quoted by Dow Jones expect there to be 8.8 million job openings.
