Surging Bond Yields Add to Pressure on Stocks

Spurt in crude prices boosts energy stocks
By Newser Editors and Wire Services
Posted Sep 27, 2023 3:46 PM CDT
Rising Oil Prices, Bond Yields Add to Pressure on Stocks
Trader David O'Day, left, and specialist John Parisi work on the floor of the New York Stock Exchange.   (AP Photo/Richard Drew)

Wall Street yo-yoed to a mixed finish Wednesday as rising oil prices and bond yields cranked up the pressure even higher on the stock market.

  • The S&P 500 rose 0.98 points, or less than 0.1%, to 4,274.51.
  • The Dow Jones Industrial Average fell 68.61 points, or 0.2%, to 33,50.27.
  • The Nasdaq composite rose 29.24 points, or 0.2%, to 13,092.85
September is on track to be Wall Street's worst month of the year as it tries to absorb a recent leap by Treasury yields. Yields rose further Wednesday, reaching heights unseen in more than a decade. Crude oil prices also rallied further above $93 per barrel.

Crude's spurt helped stocks in the oil and gas industries to some of the market's most significant gains, the AP reports. Marathon Oil rose 4.2%, and Devon Energy climbed 4% Costco Wholesale was another winner, rising 1.9% after it reported stronger profit for the latest quarter than analysts expected. On the losing end of Wall Street was NextEra Energy Partners, which fell 20.1%. The partnership cut its growth forecast for how much it will distribute to unit holders, citing the burden of higher interest rates.

The yield on the 10-year Treasury rose to 4.63% from 4.55%. That's up from about 3.50% in May and from just 0.50% early in the pandemic. It's soared as Wall Street increasingly accepts a new normal where interest rates will stay high for longer. Strategists at Bank of America say yields could keep rising. Even if the Fed is close to done with hiking its overnight interest rate, it could hold the rate there for a long time. It's all brought an end to the old era of investing, where the mantra was "There Is No Alternative" to stocks because bonds were paying such scant yields. With bonds now paying much more and providing real alternatives, stock prices could feel downward pressure for a while. (More stock market stories.)

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