Stocks took a hit while the 10-year Treasury yield remained around 4.5% as investors grappled with the possibility of prolonged high interest rates and a potential government shutdown. Moody’s Investors Service issued a warning that a shutdown, which could happen within days, may have a negative impact on the US credit rating. Meanwhile, Asia faced concerns as a major unit of China Evergrande, a troubled property developer, failed to repay its bond. This development increased worries about the sector and weighed on regional shares.
In addition to these factors, it is worth noting upcoming events that could further dictate market trends. Costco is set to announce its earnings after the market closes. Moreover, an updated second-quarter GDP reading is scheduled for release on Thursday, followed by consumer spending data and the Fed’s preferred inflation gauge on Friday.
As a result of these concerns, US stocks experienced a decline, with all three major indexes dropping by over 0.4%. The Dow Jones Industrial Average was particularly affected, falling by nearly 150 points. Although the 10-year Treasury yield slightly decreased, it had been at its highest level since October 2007. On another front, the WSJ Dollar Index slightly rose to its highest level since November of the previous year. Furthermore, Brent crude oil contracts experienced a sixth consecutive day of decline, easing fears that an increase in energy prices would exacerbate inflation and make the Fed’s responsibilities more challenging. As for global markets, Asian and European indexes also faced declines, largely driven by concerns surrounding China’s property sector.