Dow Tumbles 450+ Points as Bond Yields Hit 19-Year High
What Happened
US stocks fell sharply as investors reacted to the 10-year Treasury yield briefly touching 5.04%, its highest level since 2007, ahead of the Federal Reserve's rate decision. Mid-session: Dow Jones: down 481 points (-0.9%) S&P 500: down 0.5% Nasdaq Composite: down 0.7% At the same time, Brent crude rose above $108/barrel and WTI crude traded above $105/barrel, adding to inflation concerns. Markets are pricing in about a 90% chance of a 25-basis-point Fed rate hike.
Key Takeaways
The combination of surging bond yields, rising oil prices, and expectations of further Fed tightening is putting pressure on equities. The move above the 5% threshold on the 10-year Treasury is seen as a key risk for stock valuations and could remain a major market headwind if yields stay elevated.