US Stock Market Plunges as Oil Prices and Bond Yields Skyrocket
The US stock market is experiencing losses as oil prices and bond yields rise. The S&P 500 fell 0.4%, while the Dow Jones Industrial Average dropped 506 points, or 1%. The Nasdaq composite was down 0.6%.
The yield on the 10-year Treasury climbed to 5.01% from 4.97%, reaching its highest level in years. This increase means that everyone from the US government to households and businesses must pay more in interest to borrow money, slowing the overall economy.
Higher yields make investors less willing to pay high prices for stocks as they can earn more from sitting in bonds, which are considered safer investments. Darrell Cronk, president of Wells Fargo Investment Institute, stated that 'the result is a market that must work harder to generate earnings growth just as investors become less willing to pay premium valuations for that growth.'
The last time the 10-year yield was consistently above 5% was around the turn of the millennium. It has been on an upward trend since February, following the war with Iran which sent oil prices higher.