September Stocks Suffer as Yields Hit Near Two-Year High

US stocks are off to a weak start in September as Treasury yields have reached their highest level since January 2025, increasing the opportunity cost of holding stocks and putting pressure on higher-valued sectors such as technology.

The rise in Treasury yields comes after Fed Chair Kevin Warsh struck a hawkish tone at Jackson Hole, pushing rate-hike expectations higher. This has led to a 65% chance of a hike in September, up from 35%, according to market pricing.

The bond market is now becoming an important source of pressure for equities, particularly in the technology sector. Semiconductor stocks are under pressure, with the VanEck Semiconductor ETF down over 1%. Energy stocks, however, are moving in the opposite direction, benefiting from the rise in crude prices.