US stocks experienced a further decline on Monday, extending the previous week's losses as investors grappled with rising bond yields and the prospect of prolonged higher interest rates. The S&P 500 is now on track to end September with its worst monthly performance this year, having shed around 4% so far this month. This puts the benchmark index on course for its second consecutive losing month and the most significant monthly loss of 2023.
Investors have been increasingly anxious since the Federal Reserve warned last week that rates could remain higher for an extended period, leading to a spike in bond yields. The 10-year Treasury yield hit its highest level since 2007 last week and surged again on Monday to 4.527%. Similarly, the two-year Treasury yield reached its highest level since 2006 last week, touching 5.129%.
Sanctuary Wealth's chief investment strategist, Mary Ann Bartels, summed up the market sentiment in a note on Monday. "The market all year has wanted rate cuts and all it keeps getting are hikes," Bartels wrote. "The market wants to know when the Fed will stop raising rates, but we are not there yet."
These higher rates have also stoked fears of an impending recession. Economists from the New York Fed are predicting a 61% chance that the US will tip into a downturn by August next year.
As of Monday morning, shortly after the opening bell at 9:30 a.m., US indexes stood as follows: The S&P 500 was down 0.28% at 4,308.29 points, the Dow Jones Industrial Average was down 0.22% (a decrease of 74.81 points) to reach 33,882.62 points, and Nasdaq Composite was down 0.43% at 13,154.53 points.
In the commodities, bonds, and crypto markets, West Texas Intermediate crude oil rose 0.37% to $90.36 a barrel, while Brent crude, the international benchmark, was up 0.4% to $93.64 a barrel. Gold edged lower to $1,942.30. The yield on the 10-year Treasury bond rose seven basis points to 4.515%. Bitcoin slipped 1.77% to $26,126.
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