The Dow Jones Industrial Average posted its worst first-ten-days-of-September performance since 2008 on Tuesday, while the S&P 500 and Nasdaq Composite logged their worst 10-day starts to the month since 2020. Surging oil prices and a 10-year Treasury yield near 5% drove the decline, with a Federal Reserve rate decision due Wednesday.
The Dow Jones Industrial Average closed at 52,093.11 on Tuesday, down 0.63%. That marked its worst performance during the first 10 days of September since 2008, according to Dow Jones Market Data.
The S&P 500 fell 0.45% to 7,585.73, and the Nasdaq Composite dropped 0.78% to 25,981.57. Both indexes posted their worst 10-day starts to the month since 2020.
Oil and yields squeeze equities
Tuesday's losses followed a rough Monday. The S&P 500 had already posted four consecutive losing sessions through September 10, shedding between 0.5% and 0.7% per day during that stretch, and closed Monday at its lowest level in six weeks.
Crude has been a major driver. On Tuesday, Brent crude futures for November delivery rose almost 3% to end the session at $108.75 a barrel, while West Texas Intermediate futures advanced more than 4% to $105.83.
Meanwhile, the 10-year Treasury yield rose to its highest level since 2007, reaching 5.041% before easing back. Higher yields raise the discount rate applied to future corporate earnings, which hits growth and tech stocks hardest since so much of their valuation rests on profits expected years from now.
According to CNBC: "Investors are finally catching up with the concerns," said Melissa Brown, global head of investment decision research at SimCorp.
Fed decision looms
Hotter-than-expected producer inflation data added to the pressure. Wholesale prices came in above forecasts, and traders now see rate cuts as less likely, while a rate hike is creeping back into probability models.
Fed funds futures trading now suggests a more than 94% likelihood that the central bank will lift rates by a quarter point from the current target range of 3.5% to 3.75% at Wednesday's meeting. Tuesday's session also fell on the 18th anniversary of Lehman Brothers' bankruptcy filing, a coincidence MarketWatch flagged alongside the Dow's worst September start since 2008.
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