NEW YORK, Sept 25 — Major US stock indexes were lacklustre today as worries over prolonged higher interest rates kept the 10-year Treasury yield buoyant, while investors awaited economic data and Federal Reserve policymakers’ remarks throughout the week.
The S&P 500 and the Nasdaq dropped to their lowest level since June, while the Dow fell to over two-month low in early trade. The indexes also eyed their first quarterly declines so far this year heading into the last days of September.
Uncertainty around the interest rate outlook, including a potential hike by the end of the year and expectations for fewer cuts next year, have pushed the 10-year Treasury yield to a 16-year high, hurting growth stocks.
Alphabet, Microsoft, Tesla and Meta Platforms remained under pressure on Monday, losing between 0.2 and 0.7 per cent.
Consumer staples and utilities were the worst hit among the major S&P 500 sector indexes, while energy was the top gainer.
Investors will now monitor data on durable goods and the Fed’s preferred inflation gauge Personal Consumption Expenditures (PCE) price index for August, second-quarter GDP, and remarks by Fed policymakers including Chair Jerome Powell through the course of the week.
“Now we’re in a time where the lag (from the Fed’s policy tightening) is here and if so, its going to have its effect now, which is when you start to really watch those indicators,” said Thomas Martin, senior portfolio manager at GLOBALT Investments.
Traders’ bets on the benchmark rate remaining unchanged in November and December stood at 74 per cent and 59 per cent, respectively, according to CME’s FedWatch tool.
At 9.52am ET, the Dow Jones Industrial Average was down 73.34 points, or 0.22 per cent, at 33,890.50, the S&P 500 was down 2.59 points, or 0.06 per cent, at 4,317.47, and the Nasdaq Composite was up 2.43 points, or 0.02 per cent, at 13,214.24.
Meanwhile, Chicago Fed president Austan Goolsbee in an interview on CNBC stressed on the need to brining inflation back to the 2 per cent target, after some Fed policymakers last week warned of further hikes.
The CBOE volatility index, known as Wall Street’s “fear gauge”, hit its highest level in more than a month, reflecting rising investor anxiety.
Media firms Netflix and Walt Disney gained 1.0 per cent and 0.4 per cent, respectively, after Hollywood’s writers union reached a preliminary labour agreement with major studios on Sunday, a deal expected to end one of two strikes that have halted most film and television production.
Footwear maker Nike and sportswear retailer Foot Locker lost 0.4 per cent and 4.0 per cent, respectively, after Jefferies downgraded both the stocks to “hold” from “buy”.
US-listed shares of Chinese firms dipped ahead of a week-long holiday in the world’s second largest economy. Shares of Alibaba, PDD Holdings, Baidu and JD.com fell between 1.0 per cent and 2.9 per cent.
Declining issues outnumbered advancers for a 1.83-to-1 ratio on the NYSE and a 1.39-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 37 new lows, while the Nasdaq recorded 16 new highs and 225 new lows. — Reuters
