Wall Street fell for a third straight day Thursday as rising yields in the bond market keep cranking up the pressure.
The S&P 500 sank 33.97, or 0.8%, to 4,370.36, and August is on track to be its worst month of the year by far. The Dow Jones Industrial Average dropped 290.91 points, or 0.8%, to 34,474.83, and the Nasdaq composite fell 157.70, or 1.2%, to 13,316.93.
The losses were widespread. Some of the hardest hit were high-growth stocks seen as the most vulnerable to higher interest rates. Meta Platforms sank 3.1%, and Tesla dropped 2.8%. Apple fell 1.5% and was the heaviest weight on the S&P 500.
Stocks broadly have been retreating in August following a torrid first seven months of the year. That’s in part because a swift rise in bond yields is forcing a reassessment of how much to pay for stocks.
The 10-year Treasury, which is the centerpiece of the bond market, is now yielding 4.28% after touching its highest level since October in the morning.
If it reaches 4.34%, it will be at a level unseen since 2007, according to Tradeweb. That’s before the financial crisis and Great Recession caused yields to collapse to record lows. The 10-year Treasury was yielding less than 0.70% three years ago.
Higher yields are good for bond investors, who get fatter payouts for their investments. But it hurts stock prices because investors are suddenly less inclined to pay high prices for them and other investments that aren’t as steady as bonds.
Higher yields also mean borrowers have to pay more to get cash, which can crimp corporate profits and cause unforeseen things to break in the system, like the three high-profile U.S. bank failures that shook markets this spring.
Homebuyers are feeling the sting. The average rate on a 30-year mortgage hit its highest level this week in more than 20 years.