September closes with broad market losses as Treasury yields hit multi-year highs

Key points

• The Dow and S&P 500 recorded monthly losses in September, driven by climbing Treasury yields.
• The 10-year Treasury yield reached 5.293%, the highest level since 2007, while the 30-year fixed mortgage rate hit 7.58%, the highest since November 2023.
• ADP reported 90,000 private sector jobs were added in September, surpassing the Dow Jones consensus estimate of 68,000 and the revised August figure of 36,000.
• Boeing shares rose approximately 3% after securing a $20 billion contract with the US Navy to develop the Sixth-Generation F/A-XX Strike Fighter, while Northrop Grumman fell 3.5% after losing the bid.
• Moderna shares declined more than 6% after Citi downgraded the stock to sell, citing a price target 60% below the current closing price.
• The Federal Reserve is projected to raise overnight interest rates to 4.1% by year-end, up from the current range of 3.75% to 4%.

Background

Recent archive coverage highlights a narrow market rally driven by technology and semiconductor stocks, with 52% of S&P 500 index members trading below their 200-day moving averages. This narrowness, not seen since the dot-com peak, masks broader market weakness, with 430 of 500 S&P 500 constituents down over 21% from their peaks. Earlier in September, rising oil prices and higher Treasury yields weighed on sentiment, with the 30-year yield reaching 5.31%, its highest since 2007, amid geopolitical tensions and Federal Reserve rate hike expectations.

How outlets are covering it

Yahoo Finance emphasizes the monthly losses in the Dow and S&P 500 driven by climbing Treasury yields, while CNBC provides a broader market context, including ADP employment data, Boeing's contract win, and Moderna's downgrade. Both sources highlight the impact of rising interest rates on mortgage rates and broader market sentiment, but CNBC offers more granular details on individual stock movements and international market performance, such as Japan's Nikkei 225 rising nearly 2% and South Korea's Kospi falling 0.5%.

Why it matters

Rising Treasury yields and mortgage rates signal tightening financial conditions, which can impact consumer spending, corporate borrowing costs, and overall economic growth. The narrow market rally, driven by a few large tech stocks, masks broader market weakness, raising concerns about market resilience and potential corrections. The ADP employment data suggests a stronger labor market, which may influence Federal Reserve policy decisions and interest rate expectations.

What to watch

Traders await the August PCE report, due at 8:30 a.m. ET, which will provide insights into inflation trends and Federal Reserve policy expectations. Micron Technology is set to report earnings after the bell on Wednesday, with analysts expecting a strong print to be rewarded. The Federal Reserve's projected rate hike to 4.1% by year-end will likely influence mortgage rates and broader market sentiment.